The Hindu Business Line : Flood of payouts from fund houses likely this month

A DELUGE of dividends from mutual funds is likely to hit the market right through September even as funds line up to pay loyal investors. A number of growth and balanced schemes are expected to come out with medium-to-large sized payouts over the next few weeks.

Beginning with a few schemes managed by JM MF, which had Tuesday, September 9 as their record dates, dividends are expected to come from players such as Franklin Templeton, Birla Sunlife, Principal, Tata and Sundaram. In some of these cases, the rate is 20 per cent or more, sources in the industry said.

Kolkata-based intermediary SKP Securities has listed the payouts that are likely to be made later this month. These would be meant for investors in Birla Dividend Yield Plus (which has already handed out several dividends in the recent past), Principal Growth Fund, Sundaram Select Focus, Templeton India Growth Fund and UTI Mastershare. In each case, the relevant record date will be during the September 12-25 period. The list, SKP has clarified, may not be exhaustive.

The fund houses themselves refer to their recent performance as the basis of these announcements. Mr T.P. Raman, MD of Sundaram MF, felt payouts are justified for schemes such as Select Focus, which have "done well for themselves". "We have made certain gains and would like to share it with unit holders. At any rate, there are always some takers for dividends," he maintained, adding that the forthcoming dividend would be the second by the scheme since June.

Dividend announcements are also being favoured by a section of distributors, which are telling their clients to use these as opportunities to reap the benefits of a rising market. According to Suvridhi Capital Markets, a distributor, dividends appeal to some investors because of their tax-free status. However, as Mr Bhanu Prakash Agarwal of Suvridhi points out, dividends may not be a tax-efficient option, especially so for big investors. "They can not go about stripping dividends recklessly as this would harm their interests," he said.

MF circles also point towards some of the rather hefty dividends that were declared by similar schemes in the last one-two months. These included the likes of Franklin India Prima Plus, Franklin India Bluechip Fund and Reliance Vision Fund. Sources further referred to HDFC MF's recent move to make the erstwhile Zurich MF's investors "feel at home" by declaring dividends in four of the acquired schemes.

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