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3. Dividend Yield Diversified Equity Mutual Funds:
ING Dividend Yield Fund (G)
Objective: To provide capital appreciation in medium to long term by investing in a well-diversified portfolio of companies that have a relatively high dividend yield.
Top Sector Allocation: Financial service, energy, FMCG, information technology and automobiles, which constitute around 75% of, total portfolio.
Investment Style: Top down approach
| Scheme name | Benchmark index | *Fund Size (Rs Crore) | Total Return (Annualized) in % | Total expense ratio (%) |
| 1 yr 2yr 3yr | ||||
| ING Dividend Yield Fund (G) | BSE 200 | 85.6 | 10.7 11.4 12.8 |
2.5 |
| UTI Dividend Yield Fund (G) | BSE 100 | 3,630.6 | 7.6 8.8 9.3 | 2.0 |
| Principal Dividend Yield Fund (G) | S&P CNX 500 | 103.0 | 17.1 8.3 5.9 | 2.5 |
| Return less than 1-year are absolute and over 1 year are annualized; *Fund size as on Sept 30th, 2012
Returns as on Oct 19th, 2012; n.a. = not applicable; Source: Morningstar |
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UTI Dividend Yield Fund (G)
Objective: To provide medium to long-term gains by investing in high dividend yielding stocks.
Top Sector Allocation: Financial service, energy, FMCG, information technology and construction, which constitute around 65% of, total portfolio.
Investment Style: Investing in high yield stock across market cycles.
Principal Dividend Yield Fund (G)
Objective: To provide capital appreciation by investing predominantly in a well-diversified portfolio of companies that have a relatively high dividend yield
Top Sector Allocation: Financial service, energy, information technology, FMCG and services, which constitute around 75% of total portfolio.
Investment Style: Top down approach
There are many equity diversified mutual fund schemes available to opt while investing. Above discussed were a few of the best performing in respective categories. You need to follow certain strategies for selecting the right diversified equity fund. Let's understand these strategies below:
Compare returns across the funds within same category
For instance, returns on "UTI Opportunities" large cap diversify equity fund should be compare with returns of other large cap diversify equity fund. These returns shouldn't be compared with returns of mid and small cap diversify equity fund or any other category. Such comparisons will give you flawed results.
Compare returns for longer time frames
The ideal time frame for comparing returns is 3 to 5 years. This covers a complete economic cycle. So, it clearly showcases the returns during peak and recession phase.
Compare returns against benchmark index
Each mutual fund scheme does specify the benchmark index in their Key Information Memorandum. While reviewing the performance of a fund and before investing, investors need to analyze whether the fund is able to outperform returns of benchmark index over the long term (3 to 5 years).
Compare returns against the funds own performance
Historical performance of same fund should play a vital role while investing. There are many funds, which deliver good returns but only for a certain period. Such mutual fund schemes should be ignored while investing. You need to have a mutual fund scheme, which delivers consistent returns throughout the economic cycle.
There are certain risks involved while investing in mutual funds. This needs to be evaluated while investing and reviewing on a regular basis.
Be a smart investor. Diversify your investments by investing in diversified equity mutual funds, considering the risk capability and expected returns to achieve your goals.
Courtesy: www.InvestmentYogi.com
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