The NAV of growth option will always be higher than the dividend option because the profits re-invested in the growth option may grow in value over time. The total returns of growth option are usually higher than dividend option over sufficiently long investment horizon due to compounding effect.
Which option is better growth or dividend?
However, on a general note, the growth option of mutual funds is better than the dividend option. … Mutual fund dividends attract higher tax rates than capital gains involved in the growth option of the mutual fund schemes in most scenarios.
What happens to dividends in growth mutual funds?
Unlike the dividend option of mutual funds, growth options do not pay out any dividends. Hence the statement shows dividend reinvested as zero. Any dividends received by the mutual fund from the underlying shares invested in, are re-invested again in the portfolio securities.
What is Blue Chip Fund?
Blue chip funds are equity mutual funds that invest in stocks of companies with large market capitalisation. These are well-established companies with a track record of performance over some time. … Blue Chip is commonly used as a synonym for large cap funds.
Is reinvesting dividends a good idea?
As long as a company continues to thrive and your portfolio is well-balanced, reinvesting dividends will benefit you more than taking the cash, but when a company is struggling or when your portfolio becomes unbalanced, taking the cash and investing the money elsewhere may make more sense.
What is a good dividend rate?
Many factors, including the overall market, interest rates and the individual company’s financial situation, can influence dividend yields. But usually from 2% to 6% is considered a good dividend yield.
Why is dividend growth important?
Investing in companies with sustainable dividend growth can help augment total returns and reduce volatility while providing a growing income stream. Dividend growth oriented companies have historically participated in up-markets and helped to mitigate risk during periods of heighted volatility and market drawdowns.
Which mutual fund gives highest dividend?
Top 10 Dividend Yield Mutual Funds
|Fund Name||Category||1Y Returns|
|ICICI Prudential Dividend Yield Equity Fund||Equity||63.5%|
|UTI Dividend Yield Fund||Equity||50.6%|
|Tata Dividend Yield Fund||Equity||4.8%|
|Aditya Birla Sun Life Dividend Yield Plus Fund||Equity||51.1%|
Can I withdraw mutual fund anytime?
An investment in an open end scheme can be redeemed at any time. Unless it is an investment in an Equity Linked Savings Scheme (ELSS), wherein there is a lock-in of 3 years from date of investment, there are no restrictions on investment redemption.
Can I switch from dividend to growth option?
It is possible to switch from dividend option to growth option or vice-versa. It would entail sale of old units and purchase of new units. This might attract exit loads along with a tax on capital gains.
Which mutual fund is best to invest now?
Here is the list of top 10 schemes:
- Axis Bluechip Fund.
- Mirae Asset Large Cap Fund.
- Parag Parikh Long Term Equity Fund.
- Kotak Standard Multicap Fund.
- Axis Midcap Fund.
- DSP Midcap Fund.
- Axis Small Cap Fund.
- SBI Small Cap Fund.