MUMBAI: The asset size of dividend yield funds, currently around Rs 10,000 crore, has potential to touch Rs 1 lakh crore in the near future, according to D P Singh, Deputy MD and chief business officer, SBI Mutual Fund.
Dividend yield funds, which primarily invest in equities of companies that declare dividends regularly, are more tax-efficient than equities with the dividend payout option.
SBI Mutual Fund on Monday announced the launch of SBI Dividend Yield Fund, an open-ended equity scheme investing in a well-diversified portfolio of equity and equity-related instruments of dividend yielding firms. “The inflow of investors’ fund will increase in coming years with launch of new schemes in this category,” said Singh told this newspaper.
The new fund offer would open on February 20, and close on March 6. Currently, there are eight schemes in the dividend yield category in the country. “High dividend yield companies are generally thought of only from the angle of providing regular income, but many of them are strong growth-oriented businesses across market cap with the potential of long-term wealth creation. SBI Dividend Yield Fund presents an opportunity for those looking to invest in such strong businesses with steady cash flows for long-term,” Singh added.