The decline in the stock market has taken its toll on the dividend payout of equity schemes. Only 36 equity-oriented schemes have declared dividends in the January-March period, compared to 85 schemes in 2008.
According to data from Mutual Funds India, a mutual fund research agency, only a few schemes of ICICI Prudential Mutual Fund, HDFC Mutual Fund and Franklin Templeton have been consistent in paying dividends between 2006 and 2009.
The data reflected that dividends declared by these schemes rose consistently in the boom period of 2006 -2008. But these schemes have been hit in the current market crash and, as a result, their dividend-paying ability has eroded substantially.
| CREDIT CRUNCH Total number of schemes, which declared dividend | ||||
| Quarter | '05-06 | '06-07 | '07-08 | '08-09 |
| April | 3 | 11 | 8 | 8 |
| May | 3 | 9 | 14 | 12 |
| June | 3 | 4 | 13 | 17 |
| July | 2 | 4 | 9 | 6 |
| Aug | 6 | 11 | 9 | 9 |
| Sep | 4 | 4 | 20 | 11 |
| Oct | 5 | 11 | 12 | 8 |
| Nov | 4 | 15 | 20 | 3 |
| Dec | 13 | 12 | 21 | 15 |
| Jan | 15 | 16 | 15 | 8 |
| Feb | 17 | 20 | 23 | 13 |
| Mar | 40 | 30 | 47 | 15 |
| Total | 115 | 147 | 211 | 125 |
| Source: Mutualfundsindia.com | ||||
For instance, Franklin India Blue-Chip Fund, which had declared dividend in the range of 30 per cent to 70 per cent during 2006-2008, has paid only 30 per cent in 2009. While HDFC Long Term Advantage Fund has pruned dividends from 60 per cent to 35 per cent, ICICI Dynamic Plan has reduced it from 20 per cent to 6 per cent.
There were other equity schemes that had a great track record of dividend payment during financial year 2006-07 and 2007-08. But most of these have paid significantly lower in 2008-09.
Birla Sun Life Tax Relief 96, which had given a staggering 1,510 per cent dividend in 2006-07 and another 200 per cent in 2007-08, has paid a dividend of only 50 per cent in 2008-09.
Equity schemes have suffered greatly in the meltdown since the market scaled its all-time high on January 8, 2008. In fact, the fall was so sharp that fund houses were unable to exit stocks. With almost negligible chance of profit-booking, fund houses have found it extremely difficult to make dividend payouts this year.
Equity-oriented schemes have reported value erosion of Rs 81,307 crore in the 11 months of the current financial year.
The unaudited financial results of mutual funds for the period ended September 2008 showed that fund houses had booked Rs 3,858-crore loss on sale of investments. Even the reserves and surpluses declined by Rs 28,900 crore on account of value erosion.
Even investors have not been enthusiastic about investing in mutual funds. Only Rs 3,580 crore was invested in this financial year so far, compared to Rs 45,927 crore during the same period in 2007-08.
