Although mutual funds across all asset classes declare dividends, they are never assured. Also, the capital market regulator, Securities and Exchange Board of India (Sebi) rules state that fund houses must declare dividends out of realisable surpluses, and not just paper profits. In simpler words, if your scheme’s net asset value goes up from Rs12 to Rs12.50 purely because the share prices of some of its underlying companies went up, the fund cannot declare a dividend. Your scheme should have actually sold those shares at a profit to be able to declare dividends.
