MFs Announce Attractive Dividends To Retain Investors

The mutual fund (MF) industry is all set to meet the redemption pressures in a volatile securities market. Mutual funds have more and more started announcing higher dividends to retain the retail investors in various schemes. The fund houses are announcing dividends ranging from 40% to 80% at the close of the current financial year on March 31, 2008. Principal PNB Mutual Fund has decided to pay 80-pc dividend on the Principal Tax Saving Fund, an open-ended equity linked tax saving scheme. The Net Asset Value (NAV) of the scheme as on date is Rs 64.23. The record date for the declaration of the dividend has been kept March 31, 2008. Likewise, Birla Sun Life Mutual Fund has announced to offer a dividend of 60% on its Birla Equity Fund. The NAV of the scheme is Rs 91.29. Commenting on the MF industry's decision to offer an attractive dividend, a senior fund manager from a domestic fund house said that a majority of MF schemes have witnessed a big dip in their Net Asset Value (NAV) due to the recent meltdown in the equity market. The market capitalisation (M-Cap) was hit due to the volatility in the market which was caused due to the sub-prime factor in the global market. Obviously, MF industry offering attractive incentives in form of dividends will certainly help the fund houses in retaining the retail investors in different schemes, he said. Among other fund houses, Kotak Mahindra Mutual Fund has offered a tax free dividend of 40% on its balanced fund. The NAV of the scheme is presently Rs 22.15.