From where MF will pay dividend to Investors?
From where MF will pay dividend to Investors?
Arpit Feb. 07, 2018
Basically, when you invest funds in a mutual fund scheme, MF further invest such funds in equity/debt. The return earned on such investment is the profit that belongs to you. Now MF have 2 options. Either to retain profit or to pay back the profit to you.
Frequency is not fixed. Schemes can announce dividend monthly, quarterly, or annually. It’s like schemes have fixed a base NAV, say Rs 10 and a Target NAV say Rs 13. Now when scheme performs and NAV reaches at Rs 13, MF will pay out Rs 3 as dividend. So you receive. So you receive Rs 3 and simultaneously the NAV will back to Rs 14.
