An Indian Equity Fund that Pays Monthly Dividends
BNP Paribas Dividend Yield Fund appears to be an interesting fund. It is a good multi-cap equity fund with 5-Star ratings from Value Research, an independent provider of investment-related information. The fund has delivered about 51% returns in the last one year and is managed by Shreyas Devalker since January, 2013. The aim of the scheme is to generate long-term capital growth from a portfolio of equity and related securities. At this point of time the fund manages assets to the tune of 42 crores.
In the last five years, BNP Paribas Dividend Yield fund has built up an enviable track record for producing returns when the equity markets are rising and protecting those returns when the market slumps. After a hesitant start, the fund’s track record has improved remarkably since 2009.
The most interesting aspect of this fund is that it is perhaps the only pure equity fund in India that has announced monthly dividends very consistently over the last three or more years. In this sense it remained truly a ‘dividend yield’ fund. Thus, it may be an ideal investing instrument for those investors who need a regular income from their investments, and yet want to remain invested in Indian equities for the long term. There are no equities or equity funds in India known to the writer of this post other than BNP Paribas Dividend Yield fund that pays monthly dividends.
At the time when this post is being written, dividend payments from equities or equity-oriented mutual funds are tax free under the Income Tax rules of India. Moreover long term capital gains (for investments held for more than a year) is also tax free. So all the gains that you derive from this fund, unless the holdings are sold within one year, will be tax free.
An intelligent investor may also want to keep some money in a short term debt fund of the same fund house and then switch to this equity fund when the market is down. That will take care of both her asset allocation and will provide tax-free monthly returns. As of now, no other equity-oriented funds will give you the benefit of having a monthly return from your investments. However, it should be borne in mind that these monthly dividends, although consistently paid in the last many years, are not guaranteed. So an investor may not be able to depend entirely on these dividends for his regular income needs.
Whatever is explained above is the writer’s own personal opinion and is not intended to replace professional financial advice. Happy investing!