The Hindu Business Line : HDFC MF's Core & Satellite: Dividend scheme attracts many than growth

GROWTH plans offered by equity funds may not be winning hands down over their dividend counterparts, despite the advances being recorded by the market in recent days.

Data provided by HDFC Mutual Fund pertaining to its latest equity offering, Core & Satellite Fund, clearly indicate that the possibility of receiving dividends has prompted a large number of investors to ignore the capital appreciation option.

The scheme's dividend plan attracted 23,052 investors against 18,701 who have been allotted units under the growth plan. In terms of collection, the two have managed to gather Rs 249 crores and Rs 142 crores respectively.

HDFC Core & Satellite Fund, which seeks to invest 60-80 per cent of its assets in large-cap stocks, was largely positioned as a retail product, in a market that had been looking up for some time. The difference in numbers - in the context of the debate over `growth versus dividend' - strengthens the view that a prominent section of the retail market still prefers dividends over growth.

This, sources feel, is a significant trend, the increased possibility of recording capital growth notwithstanding.

The scheme was launched simultaneously with HDFC Multiple Yield Fund, which is predominantly an income scheme that can allocate a maximum 25 per cent to equities. The two collected Rs 996 crore.

The figures recorded by HDFC Multiple Yield Fund, however, have captured quite a different trend, given the number of unit holders who have chosen the growth plan (5,641) over and above those who have opted for the dividend plan (4,708). The collections in this case were: Rs 424 crore by the growth option and Rs 181 crore by the dividend option.

HDFC MF, in a note sent to those who have been successfully allotted units, has pointed out that no entity held more than 25 per cent of the NAVs on the date of allotment. Both schemes have been now opened for transactions at prices based on NAVs.