Wednesday, March 23, 2011

Birla Sunlife MF, HDFC MF, Reliance MF and Franklin Templeton offer payouts to retain investors

Fund houses are attempting to woo flighty investors by offering handsome dividends, with the market trading flat over the past one year. Fund houses such as Birla Sunlife Mutual Fund, HDFC MF , Reliance and Franklin Templeton have announced dividends ranging from 15% to 20%, in an effort to incentivise investors and persuade them to retain money in existing schemes.

Much more than the current market, it is the year-ago (2009-2010 ) market rally that is helping mutual funds to dole out higher dividends to investors. The ' dividend cushion' that funds created in 2009-2010 - when the stock market more than doubled - is helping fund managers pay dividends in 2010-2011, when the benchmark Sensex returned just over 1.4%.

"Even though the market returned over 100% last year, fund houses distributed just about 20-30% as dividends. Fund houses are paying dividends from the gains they made last year," said the head of investment of a bank-promoted fund house. "Fund managers of highdividend paying funds have managed to shelter their 'dividend cushion' (generated from last year's investments) from market volatility," the investment head said.

Apart from 'dividend cushion', several small-sized fund houses have seen their asset bases widening over the past six months, thanks to regular inflows, especially through systematic investment plans. Asset bases of Axis Mutual and Mirae Asset Investment have grown 44% and 34%, respectively, between April and December 2010. Asset under management or the AUM, of JP Morgan Mutual Fund, DSP Blackrock , Franklin Templeton and Fidelity Mutual Fund rose 15 to 26% during this period.

"Smaller fund houses are paying higher dividends than big-sized asset managers. Fund houses, like Taurus and Sahara Mutual , have paid dividends in the range of 20-25 %. By paying out high dividends, these fund houses expect to attract more investors into their schemes," said Rupesh Bhansali, head-mutual fund research, GEPL Capital.

According to Mr Bhansali, if one takes an year-on-year comparison, dividend yields generated by top fund houses have come down significantly this year. If one compares industry numbers, overall dividend yields have fallen from 25-30 % in 2009 to 17-19 % in 2010, he said.

Fund houses announce dividends to keep retail investors in good spirits. A good dividend payout, especially at a time when the market is choppy will prompt them to stay invested in schemes. A huge dividend payout will also help distributors sell the product more efficiently and bring in more money. "Retail investors, especially elderly investors, expect dividend payouts periodically," Birla Sunlife Mutual Fund CEO A. Balasubramanian.

"We could generate distributable profits from investments made in the first half of current year. The market has turned bearish only since September. We were also able to keep our NAV at higher levels, when the market was trending down," Mr Balasubramanian said.

Conventional fund management wisdom makes it imperative for fund managers to declare dividend as it is one of the few ways to take profits off the table. This is more so in the case of an overheated market, where there are not many good investment opportunities.

Source: http://economictimes.indiatimes.com/articleshow/7759136.cms?prtpage=1

No comments:

Just click away from joining most active Mutual Fund India google group

Google Groups
Subscribe to Mutual Fund india
Email:
Visit this group

Aggrasive Portfolio

  • Principal Emerging Bluechip fund (Stock picker Fund) 11%
  • Reliance Growth Fund (Stock Picker Fund) 11%
  • IDFC Premier Equity Fund (Stock picker Fund) (STP) 11%
  • HDFC Equity Fund (Mid cap Fund) 11%
  • Birla Sun Life Front Line Equity Fund (Large Cap Fund) 10%
  • HDFC TOP 200 Fund (Large Cap Fund) 8%
  • Sundram BNP Paribas Select Midcap Fund (Midcap Fund) 8%
  • Fidelity Special Situation Fund (Stock picker Fund) 8%
  • Principal MIP Fund (15% Equity oriented) 10%
  • IDFC Savings Advantage Fund (Liquid Fund) 6%
  • Kotak Flexi Fund (Liquid Fund) 6%

Moderate Portfolio

  • HDFC TOP 200 Fund (Large Cap Fund) 11%
  • Principal Large Cap Fund (Largecap Equity Fund) 10%
  • Reliance Vision Fund (Large Cap Fund) 10%
  • IDFC Imperial Equity Fund (Large Cap Fund) 10%
  • Reliance Regular Saving Fund (Stock Picker Fund) 10%
  • Birla Sun Life Front Line Equity Fund (Large Cap Fund) 9%
  • HDFC Prudence Fund (Balance Fund) 9%
  • ICICI Prudential Dynamic Plan (Dynamic Fund) 9%
  • Principal MIP Fund (15% Equity oriented) 10%
  • IDFC Savings Advantage Fund (Liquid Fund) 6%
  • Kotak Flexi Fund (Liquid Fund) 6%

Conservative Portfolio

  • ICICI Prudential Index Fund (Index Fund) 16%
  • HDFC Prudence Fund (Balance Fund) 16%
  • Reliance Regular Savings Fund - Balanced Option (Balance Fund) 16%
  • Principal Monthly Income Plan (MIP Fund) 16%
  • HDFC TOP 200 Fund (Large Cap Fund) 8%
  • Principal Large Cap Fund (Largecap Equity Fund) 8%
  • JM Arbitrage Advantage Fund (Arbitrage Fund) 16%
  • IDFC Savings Advantage Fund (Liquid Fund) 14%

Best SIP Fund For 10 Years

  • IDFC Premier Equity Fund (Stock Picker Fund)
  • Principal Emerging Bluechip Fund (Stock Picker Fund)
  • Sundram BNP Paribas Select Midcap Fund (Midcap Fund)
  • JM Emerging Leader Fund (Multicap Fund)
  • Reliance Regular Saving Scheme (Equity Stock Picker)
  • Biral Mid cap Fund (Mid cap Fund)
  • Fidility Special Situation Fund (Stock Picker)
  • DSP Gold Fund (Equity oriented Gold Sector Fund)