A tale of masterful payouts

Mastershare has paid dividends since its launch in 1986

Mastershare, an equity-oriented scheme from UTI Mutual Fund, has emerged as a market outperformer and has also been consistently paying dividends for 18 years in a row since its launch in 1986.

The scheme was launched in 1986 by the then Unit Trust of India. If you had invested Rs 100 then (10 units at the rate of Rs 10 per unit), its present value would be Rs 1,160, after taking into account all the dividends paid by the company and assuming that you reinvested your dividends.

On the other hand if you had invested Rs 100 in gold, its value would be now Rs 255, roughly. You can work out that math for yourself. So if you had invested Rs 10000 in the scheme, its value now would be Rs 1,16,000.

Rs 10 invested in the scheme has earned Rs 52.26 in dividend alone since inception. Its dividend record is impressive.

Its very first dividend in 1987 was eight per cent and then 13 per cent the following year. For the next five years its dividend payout was at 18 per cent, which it upped to 20 per cent in 1994.

For the next six years the pay-out was lower at 16 per cent and then it went down still further to 10 per cent in 2001 and 2002, which were low years for the market.

Then in 2003, with the stock market boom the pay out went up to 14 per cent and now in September 2004 again the payout is at 20 per cent.

Now let us compare the performance of the scheme with the benchmark Sensex. Let us take the nearest term.

In the last one year the scheme's return has been 33.80 per cent against the Sensex's 22.32 per cent.

Over the last three years Mastershare's return has been 25.36 per cent while the index has returned 16.25 per cent.

Over a five-year time-frame the scheme's returns were of the order of 4.63 per cent against the Sensex's 1.48 per cent. And, if you take it since inception, the scheme has returned more than 14 per cent against the index returns of 9.22 per cent.

In between the scheme has declared two rights offer "" 1:2 in 1989 and 1:1 in 1993. There were also three bonus issues "" 1:2 in 1991, 1:3 in 1993 and 1:5 in 1995.

Now let us compare it with peers. We cannot go back to 1986 for a comparison, but let us take the last five years.

Just for comparison's sake, a small savings scheme such as the Public Provident Fund would have yielded around 10 per cent in the last five years.

Equity funds, on an average, have returned around 20.50 per cent and balanced funds more than 17.50 per cent, while debt funds have returned slightly more than 12 per cent.

Probably one should take a look at the consistency of schemes and how they have performed over the long term, before making the investment decision.