Equity funds ramp up payouts as markets rally

Equity mutual funds are aggressively paying out dividends to serve the twin objective of rewarding shareholders and booking profits when the market is hitting new peaks.

About nine major fund houses have announced dividends in their various equity schemes over the last two months. Fund Managers said AMCs are holding surplus cash, which is being justfully distributed.

Besides, since dividends can be paid only out of realised gains, funds have to necessarily book profits which helps brings in more discipline at a time when market is treading into uncharted territory.

UTI Mutual Fund, which has distributed dividends and bonus worth more than Rs 3,000 crore since January 2003, has declared dividends on four of its eqity schemes. A dividend of 45 per cent on UTI- Growth Sector Fund- Brand Value (UTI-GSF-Brand Value) has been the latest announcement. The record date for the dividend is October 10, 2005.

This was the second dividend declared since the inception of the fund, the previous being 10 per cent in December 2004. Another 40 per cent divident was declared under the UTI Equity Tax Savings Plan on September 15, 2005. The fund paid a dividend of 20 per cent earlier in November 2004.

"Many a times in the past when the markets surged and fell, loyal investors failed to get a share of the profits. Moreover, we feel that better distribution of profit is the only way to be frequently in touch with retail investors," said the official spokesperson of the fund house.

The AMC has also declared 25 per cent dividend under UTI Thematic Banking Sector Fund and another 20 per cent dividend under UTI Basic Industries Fund. The scheme had declared a dividend of 12 per cent early this year.

The Birla Sunlife Mutual Fund, which will start managing the schemes of the Alliance Mutual fund from today, has declared a 40 per cent dividend under Birla Equity Plan, on October 21, 2005. In march 2004, the fund had declared a dividend of 15 per cent.

Ravi Sharma, vice president, Marketing & Retail Sales, Birla Sunlife Mutual fund, said: "Attractive dividends make customers feel that they are being rightfully rewarded for what is being churned from the market. We have always believed that the surplus money earned from the market should be shared amongst our customers."

The ING Vysya Mutual fund had announced a 65 per cent dividend on ING Vysys Equity Fund on 15 September. Earlier it had announced a 15 per cent dividend on its Select Stocks Fund on 29 August.
 

FAST AND FURIOUS
Scheme	Record date	Dividend %	Ex-dividend NAV
ING Vysya Equity Fund	15-Sep-05	65	11.23
Principal Resurgent India	2-Aug-05	55	24.40
Birla India Opportunities	16-Sep-05	40	14.90
Franklin India Opportunity	14-Sep-05	25	13.79
Chola Midcap Fund	19-Sep-05	20	13.45
Equity diversified schemes - dividends

The Principal PNB Mutual Fund had declared 55 per cent dividend on the Principal Resurgent India Equity Fund on 2 August. The Prudential ICICI AMC had declared 20 per cent maiden dividend on the PruICICI Dynamic Plan, last week.

Sahara Mutual Fund had proposed its maiden dividend of 15 per cent under Sahara Midcap Fund on September 20, 2005. The Chola Mutual fund had declared 20 per cent and 15 per cent dividends under its Midcap and Multicap funds on 19 September and 29 August respectively.