ALL >> Business >> View Article
Understanding Dividend And Growth Option In Mutual Funds
Growth Option:
In growth option all profits earned by the fund are invested back into the scheme. So, investor will not receive any intermediate payments in the form of Dividend or Bonus. The return from the scheme gets compounded over time, resulting in higher proceeds at the time of maturity. The only option to realize the profit in the growth option is to sell or redeem your investments. Growth option is best suited to those who are willing to invest for long term.
Dividend Payout option
It implies that part of the profits earned by the fund from time to time is distributed to the unit holders in the form of dividend. Dividend is distributed from the NAV itself, so the NAV of the fund gets reduced by the same amount of dividend declared. The amount and frequency of dividends is never guaranteed. Dividends are declared only when the scheme makes a profit and it is at the discretion of the fund manager.
Dividend Reinvestment option
In this option dividends declared by the fund are not paid to the unit holders but instead reinvested back in unit holder’s account at the prevailing NAV. Dividend ...
... Reinvestment option is as good as growth option. However, one should note that dividend reinvested is treated as new investment and accordingly it may attract exit load & lock in period from the reinvested date.
Few points to note
- Different options doesn’t imply that they are 2 different schemes
- It invests in same set of stocks/bonds; just the nature of distribution of profits is different
- All other things like Investment objective, Fund manager, exit load, etc will remain the same
- NAV of Growth and dividend option are different
- NAV of dividend option will always be lower than growth option (NAV of growth & dividend option will be the same where the fund has never declared dividend under its dividend option)
Add Comment
Business Articles
1. Unveiling The Material Characteristics Of Plastic PartsAuthor: adam.xu
2. Top 5 Beach View Resorts In Chennai For A Memorable Getaway
Author: greenmeadows resort
3. Relationship Counselling Den Haag Brings The Best Chance To Understand Each Other’s Needs!
Author: Angelika Matthias
4. Web Development Company: Guide For Hiring The Best
Author: Sagar Tech
5. Make A Business Website To Get Started Online
Author: Sagar Tech
6. Elevate Your Software Quality With Agile Advisors: Premier Software Testing Consultancy In Dubai, Uae
Author: kohan
7. Affordable Polyester Pleated Mesh From Top Manufacturers
Author: pavitra
8. Empowering Sustainable Development: Agile Advisors As Your Trusted Leed Certification Consultant In Dubai And Uae
Author: kohan
9. Buy Cats Eye Gemstone Online In Ahmedabad
Author: rishabhjains
10. Why Data Destruction And Sanitisation Are Important
Author: Destruction and Sanitisation
11. Stock Market Update: शेयर बाजार में लगातार चौथे हफ्ते बढ़त: क्या तेजी बरकरार रहेगी? जाने इस हफ्ते किन महत्वपूर्ण पहलुओं पर ध्यान देना चाहिए
Author: M Ratlami
12. Perfect Happy New Year Gift For Your Girlfriend Thoughtful Ideas For 2024
Author: MyFlowerTree
13. China Valmax Valve Co., Ltd
Author: China Valmax Valve Co., Ltd.
14. Mastering Clipping Path In Photoshop: A Guide To Precision Editing
Author: Sam
15. Expert Emergency And Cosmetic Dental Care Services For Families And Individuals In St. Louis
Author: Jessica Williams