4 Replies to “When Mutual funds give dividends is it based on the face value of the NFO?”

  1. No, it does not depend on its face value. It depends on its profits earned.
    Investing in running funds is always better than NFO because you can track of its past performance. Also there are more charges on NFO because of its high initial expenses on marketing etc.

  2. Dividends paid by mutual funds are always based on the dividends paid by the securities owned by the fund. The total amount of the dividends paid by the underlying securities is divided by the number of fund share outstanding to determine the amount of dividends paid per share.

    It works like this for all funds, both established and NFOs. However, the additional costs associated with purchasing NFOs will diminish the effective dividend yield.

  3. But If you invest in NFO , they will declare dividend at least after 9-12 months. But in a running fund , they may declare anytime as per their profit.

    Also dividend has not too much significance in Mutual fund as your corpus is reduce by the same amount.

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