JM Balanced, Reliance Quant Plus Fund and Kotak 50 have witnessed a spurt in their AUMs after declaring dividend.
An analysis of portfolio disclosure of Reliance Quant Plus Fund shows that its AUM went up by a whopping 3730% i.e. from Rs.36 crore in May to Rs. 1379 crore in June. Similarly, Kotak’s K-50 Fund AUM has increased substantially from Rs.706 crore in May to Rs.1243 crore in June (portfolio disclosure data).
All efforts to download JM Financial MF’s monthly portfolio disclosure of June proved futile till the time of writing this piece. However, its monthly AAUM disclosure shows that AAUM of balanced funds had moved up from Rs.809 crore in May to Rs. 1856 crore in June.
These AUMs reflect the figure after distribution of dividend.
JM Balanced Fund has declared a dividend of Rs.4.75 per unit (roughly 20%) under its quarterly dividend option. The record date for the dividend was June 18.
Similarly, Reliance Quant Plus Fund has announced a dividend of Rs.4.2 (regular plan) and Rs.4.7 (direct plan) per unit which roughly translates to 28% under its dividend option. The record date for the dividend was June 24. Recently, Reliance MF has revised exit load in its Reliance Quant Plus Fund by reducing its load structure from 1% to 0.25%. Also, the fund house has reduced its exit load tenure from one year to a month with the effect from June 5 (before the record date). This means no exit load will to be charged after a month.
Kotak 50 too has declared a dividend of Rs.11 per unit which roughly translates to 25%. The record date was June 29.
Experts say that these inflows have come from large investors like corporates and HNIs. Typically, these investors do a dividend stripping for tax planning.
The dividend amount is tax free in equity funds. In addition, SEBI rules say that dividend should not be subject to exit load.
Last year, a few fund houses had introduced bonus options in their schemes. As a result, a lot of corporates and HNIs did bonus stripping. Earlier, AMFI had issued best practices guidelines in which it has asked fund houses to discontinue offering bonus option in their schemes.
