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Nilanjan Dey

Kolkata , Oct. 19

THE current year stands in sharp contrast to the previous one in terms of the number and frequency of dividends paid by equity funds, which have gained from the rapid advances recorded by the stock markets in recent months.

A large number of diversified equity funds as well as a few niche ones like UTI Petro and Birla MNC have declared dividends during this calendar year, their combined tally significantly greater than the number of players who paid investors in 2002.

While around 20 schemes had paid dividends during January-December 2002, the number has already crossed 70 this year.

Investment circles, which say dividends are in a way helping fund houses mobilise more money from the market, attributed the speed at which dividends are being declared to the budgetary proposal that rendered these payouts free from tax.

The gains recorded by the funds in question, thanks to an improving stock market, also contributed significantly to the situation, it is pointed out.

It is difficult to estimate the amounts that have been collected on the basis of these payouts. However, a review of the dividends and their record dates points towards an interesting pattern.

The July-September season, for instance, was particularly important because of the large number of instances of payments.

Among the frequent payers were schemes managed by MFs like UTI, HDFC and Birla Sunlife. A few of the leading ones have paid substantially more (considering the overall quantum) than their peers.

According to data collated by Value Research, beginning January 2003, the cases that stand out include JM Basic (45 per cent on March 25), Birla MNC (50 per cent on August 29) and First India Growth Fund (30 per cent on September 25).

A couple of schemes managed by Reliance Capital - Reliance Vision and Reliance Growth - have come to the fore on this count.

Both have paid dividends on several occasions - the former in February, June and September and the latter in February, July and October. Birla Dividend Yield Plus has also paid repeatedly - 8 per cent, 5 per cent, 12 per cent and 18 per cent in May, June, July and September respectively.

Sources told Business Line the rest of the year would also be active on the payout front as more schemes were expected to hand out dividends to their unit holders.

According to Mr Ravi Sharma, head of marketing at Birla MF, such payments are a way of meeting investors' expectations.

"Dividends are a function of the way a fund is being run. Frequent payments help bolster a fund's image among investors. Somewhere down the line, the market also begins to respond positively to the situation," he said.

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Equity funds make more dividend payouts as markets improve

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