IDBI Mutual Fund has announced a new fund offering (NFO) for IDBI Dividend Yield Fund, an open-ended equity scheme that will mainly invest in high dividend-yielding stocks. A company that consistently pays out high dividends is considered to have stable earnings. The NFO period for the scheme began on December 3 and will end on December 17, 2018. The scheme will reopen for subscription and redemption of units within five business days from allotment of units.
A dividend yield is calculated as a percentage of dividend per share divided by market price per share. A high dividend yield can indicate a relatively undervalued company.
The scheme will invest a corpus of between 65 to 100 percent of its assets in high dividend-yielding stocks. Upto 35 percent of assets may be invested in other companies and debt and money market instruments. Additionally, the scheme may also invest up to 10 percent in units issued by REITs and InVITs. The scheme will not invest in foreign securities or securitised debt.
IDBI Dividend Yield Fund will be benchmarked against the Nifty Dividend Opportunities 50 – Total Return Index (TRI). The benchmark index includes stocks that pay out high dividends and stocks that are considered relatively stable. The index includes 50 companies listed on the National Stock Exchange (NSE).
Some of the top-weightage stocks in the Nifty Dividend Opportunities 50 Index are Hindustan Unilever (10.56 percent), Tata Consultancy Services (10.22 percent), ITC (10.08 percent) and Infosys (9.95 percent).
| Index Name | 1-yr Returns (%) | 5-yr Returns (%) |
| Nifty Dividend Opportunities 50 TRI | 2.06 | 12.77 |
*Returns data as of Nov. 30, 2018
Some other fund houses that have dividend yield funds are UTI, Aditya Birla Sun Life, Principal, Templeton India. Five-year returns for these are 14.06 percent, 12.88 percent, 17.22 percent and 14.08 percent, respectively.
The fund will be managed by Ashish Mishra. Other schemes managed by Mishra include IDBI Diversified Equity Fund, IDBI Gold Exchange Traded Fund, IDBI Focused 30 Equity Fund.
Key information about the IDBI Dividend Yield Fund NFO:
| NFO period | December 3 – December 17, 2018 |
| Minimum application amount | Rs. 5,000 |
| Exit load | 1 percent exit load, if more than 10 percent investment is redeemed or switched out within one year of allotment date |
| Benchmark | Nifty Dividend Opportunities 50 (TRI) |
| Fund manager | Ashish Mishra |
Other Funds by IDBI Asset Management
| Fund Name | 3-Year Returns | AUM (Cr) |
| IDBI Nifty Index Fund – Direct Growth | 8.75% | 76.1 |
| IDBI Nifty Index Fund Growth | 7.52% | 141.2 |
| IDBI Liquid Fund – Direct Growth | 7.16% | 1,967.97 |
| IDBI Liquid Fund Growth | 7.03% | 887.5 |
| IDBI Equity Advantage -Direct Growth | 6.71% | 26.54 |
| IDBI Short Term Bond Fund – Direct Growth | 6.19% | 67.33 |
| IDBI Ultra Short Term – Direct Growth | 5.79% | 92.08 |
| IDBI Gilt Fund – Direct Growth | 5.76% | 10.31 |
| IDBI Gold Exchange Traded Fund | 5.69% | 60.77 |
| IDBI Dynamic Bond – Direct Growth | 5.24% | 7.77 |
| IDBI India Top 100 Eqty -Direct Growth | 5.22% | 19.25 |
| IDBI Short Term Bond Fund Growth | 5.06% | 55.59 |
| IDBI Equity Advantage – Regular Growth | 5.03% | 559.18 |
| IDBI Ultra Short Term Fund Growth | 5.00% | 215.71 |
| IDBI Gilt Fund Growth | 4.77% | 11.49 |
| IDBI Diversified Equity Fund-Direct Plan | 4.75% | 12.5 |
| IDBI Credit Risk Fund-Direct Plan | 4.64% | 3.33 |
| IDBI Gold Fund – Direct | 4.47% | 1.13 |
| IDBI Nifty Junior Index -Direct Growth | 4.41% | 9.73 |
| IDBI Short Term Bond – Direct Growth | 4.41% | 16.11 |
| IDBI Dynamic Bond Fund Growth | 3.91% | 25.27 |
| IDBI Gold Fund | 3.91% | 28.74 |
| IDBI Credit Risk Fund-Regular Growth | 3.58% | 84.01 |
| IDBI India Top 100 Equity Fund Growth | 3.48% | 354.41 |
| IDBI Nifty Junior Index Fund Growth | 3.28% | 40.62 |