Abolition of DDT: Dividend Yield MFs to benefit?
DSIJ IntelligenceCategories: MF Unlocked, Mutual Fund
With the recent Budget announcements, Finance Minister Nirmala Sitharaman abolished the Dividend Distribution Tax (DDT). So, let’s find out whether abolishing DDT would benefit dividend yield funds or not!
On February 01, 2020 (Saturday), our Finance Minister presented Union Budget in the parliament. Although, the things proposed in the Budget may have a major benefit in the long-run, but yet it failed to meet the expectations of the majority. This was confirmed by the markets, which slumped around 2 per cent to 2.5 per cent on Budget day.
Besides, Dividend Distribution Tax (DDT) was the only thing that got abolished. So, who will be its beneficiaries? Of course, the companies with high dividend yields would be benefiting from the same. And not just companies but also, mutual funds investing in those companies.
In mutual funds space, there are funds that invest particularly in companies with high dividend yields. Yes! They are none other than dividend yield funds. As per the recategorisation circular of Securities and Exchange Board of India (SEBI), dividend yield funds are the ones that are mandated to invest a minimum of 65 per cent of its assets in equity and equity related instruments, with an objective of generating capital appreciation via investment in dividend yielding companies.
|
Funds |
Returns (per cent) |
||||||
|
1 Month |
3 Months |
6 Months |
1 Year |
3 Years |
5 Years |
10 Years |
|
|
Aditya Birla SL Dividend Yield Fund |
1.68 |
3.78 |
11.90 |
8.98 |
3.93 |
2.39 |
9.20 |
|
ICICI Pru Dividend Yield Equity Fund |
-0.06 |
-0.93 |
2.05 |
0.76 |
4.78 |
4.60 |
- |
|
IDBI Dividend Yield Fund |
2.59 |
2.31 |
12.72 |
10.14 |
- |
- |
- |
|
Principal Dividend Yield Fund |
1.79 |
1.72 |
11.66 |
8.75 |
11.55 |
8.27 |
10.80 |
|
Templeton India Equity Income Fund |
0.29 |
0.59 |
3.91 |
4.59 |
7.14 |
6.11 |
10.42 |
|
UTI Dividend Yield Fund |
0.24 |
-1.79 |
6.13 |
4.33 |
8.57 |
5.48 |
9.50 |