Site icon News Daily Articles

Earn more with less risk in UTI Dividend Yield Fund

The objective of the scheme is to generate long term capital appreciation and income by investing mainly in dividend-yielding and equity-related securities. Nevertheless, there can be no certainty or guarantee that the investment target of the scheme will be achieved. 

The UTI Dividend yield fund manager invests in stocks with a dividend yield (dividend per unit divided by market value) of 65 to 80 percent of its corpus, which is higher than the market average dividend yield. Thus the dividend yield serves as the first filter in-stock selection for those funds. There are several benefits of using dividend yield as the initial filter.

The fund manager prefers to invest in companies that have a reliable cash flow and are consistent and capable of steady rate pay dividends. Such a firm usually does not raise its dividend high even during a recession. These investments make the funds stable and less volatile than their diversified, growth-oriented peers. It is a fund that invests primarily in companies with high dividend yields, which is essentially a financial measure that indicates how much dividend a company pays each year compared to its share price.

Dividend yield returns tend to be lower during a decline than growth funds. “The interest element of these funds is applicable at such times. From the point of view of the dividend yield, they appear attractive. People feel that at least the dividend portion of the return is guaranteed.

A drawback of UTI Dividend yield fund

The major drawback of dividend yield funds is that they underestimate growth funds in growing markets. Aggressive investors can avoid these funds with higher returns and lower risk appetite.

These points to remember

Conclusion: In addition, if you are a conservative investor and looking for a less volatile equity funds and should opt for a dividend yield fund offering good, long-term risk-adjusted returns, then invest in UTI Dividend Yield Fund.

Exit mobile version