SBI Mutual Funds has launched Dividend Yield Fund NFO that open for subscription from 20th February 2023. SBI Dividend Yield Fund predominantly will invests in dividend yielding stocks and aims to provide capital appreciation and regular income.
Investment Objective
The investment objective of the scheme is to provide investors with opportunities for capital appreciation and/or dividend distribution by investing predominantly in a well-diversified portfolio of equity and equity related instruments of dividend yielding companies.
However, there can be no assurance that the investment objective of the Scheme will be realized.
What are Dividend Yield Funds?
As the name indicates, dividend yield funds invest in dividend yielding stocks. Their main motto is to provide capital appreciation by providing regular income.
Investment Strategies
The scheme would invest predominantly (at least 65% of the net assets) in companies that have a relatively high dividend yield, at the time of making the investment. Companies may also choose to do a buyback in addition to or as an alternative to dividend. This also constitutes a yield to shareholders and will be accordingly used while calculating dividend yield. The Scheme will consider dividend yielding stocks which have paid dividend (or done a buyback) in at least one of the three preceding financial years.
Benchmark
NIFTY 500 TRI
Asset Allocation
The funds collected under the scheme shall generally be invested consistent with the objective of the scheme in the following manner:
instruments | Indicative allocations (%) | Risk Profile |
Equity and equity related instruments of dividend yielding companies (including equity derivatives) | 65-100 | High |
Other equity & equity related instruments | 0-35 | High |
Debt securities (including securitized debt & debt derivatives) and money market instruments | 0-35 | Low to Medium |
Units issued by REITs and InvITs | 0-10 | Medium to High |
NFO - Issue details
This is an open-ended mutual fund. Here are the NFO issue details.
Scheme Opens | 20-Feb-23 |
Scheme Closes | 06-Mar-23 |
Scheme reopens for continuous purchase/sale | Within 5 working days |
Minimum Lumpsum | Rs 5,000 |
Minimum SIP | Rs 500 for 12 months |
NAV of the fund | Rs 10 during NFO period |
Entry Load | Nil |
Exit Load | 1% if redeemed in excess of 10% within 365 days |
Risk | Very High Risk |
Benchmark | NIFTY 500 TRI |
Fund Manager | Mr Rohit Shimpi Mr.Mohit Jain |
Performance of existing Multicap Funds
Here is the performance of some existing dividend yield funds. This would give an idea to investors on how these funds have performed in medium to long term. Returns indicated here are annualized returns.
Scheme | 1 Yr Ret (%) | 3 Yr Ret (%) | 5 Yr Ret (%) |
ICICI Prudential Dividend Yield Equity Fund | 9.44 | 24.28 | 10.68 |
Templeton India Equity Income Fund | 7.94 | 23.57 | 13.19 |
Aditya Birla Sun Life Dividend Yield Fund | 11.12 | 18.26 | 9.1 |
UTI Dividend Yield Fund | 2.25 | 16.37 | 10.88 |
Sundaram Dividend Yield Fund | 3.88 | 16.24 | 11.01 |
IDBI Dividend Yield Fund | 1.78 | 14.46 | -- |
HDFC Dividend Yield Fund | 9.95 | -- | -- |
Tata Dividend Yield Fund | 3.94 | -- | -- |
Why should you invest
Here are a few reasons to invest in such schemes.
1) These funds provide better yield on investments as they invest majorly in blue chip funds that provide higher dividend yield.
2) The level of risk in such funds is relatively low as they invest majorly in large-cap stocks that has proven track record of paying dividends.
3) Dividend Yield Funds have generated 9% to 14% annualized returns in the last 5 years and 12% to 15% annualised returns in the last 10 years. This shows consistent performance in this category.
Suitability
Investor looking for potential long term wealth Creation (>4 years), wanting to have exposure to relatively strong businesses
Investor seeking a diversified portfolio with investments in high dividend yielding stocks based on research expertise
Long term investors aiming to build wealth to meet their long-term financial goals with a potentially better risk return trade off.
One stop solution that offers tax efficient SWP facility to meet regular cashflows unlike dividends from individual stocks
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*Investors should consult their financial advisors if in doubt about whether the product is suitable for them
Note: The above information has been sourced from the Scheme Information Document provided by SBI Asset Management. Read the entire document before investing, Disclaimer: Jaiprakash (ARN/Distributor - 70524; brand name Vasundhra Investment) is the distributor of the mutual fund. Please consult your investment advisor before investing
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.