Its very interesting explanation given by Sunil sir... I am agree with you. But can you elaborate the same case from 2007 market peak to till now.... How much swps have delivered? And how dividend option delivered the returns.? We IFA would like to know that too... In my opinion dividend is pretty good option... As fund manager decides how much dividend rate to be declared. He would be in better position to think and act in line with market valuations and make the decision about dividend. The periodic or say monthly dividend would have help investor to cut down their debt or other needs. So the investor may not be in hurry to redeem the investment even its valuation goes down temporarily. I have observed those investors had opted dividend option has remain invested very long time.... As they dont concerned much about market levels and sentiments, "They simply remain invested"

"TRAP" created by almost all AMCs. SEBI should intervene and impose DDT(Dividend Distribution Tax) on SUCH funds if dividend is paid out more than once in a year.

All the huge inflow in the equities (either in SE platform or in MF schemes) was the result of fantastic (and mostly unrealistic in future) past performance. It is duty of all AMCs and MFDs to avoid past performance as the sole criteria of selling MF schemes.

If investor invest such good amount of Rs.1 cr for dividends pay out is naver foolish investor nore fund managers

When AMCs offer dividend option in FMPs which are purely Debt Fund category, why not dividend be paid on Balanced Funds which are investing in equity and debt fund categories. Many investors wanted to receive some amount on their investment monthly/ quarterly with some assurance on their investments. For them investment in Balanced Funds with dividend payout option in found useful. However their are made aware that payment of dividend is not assured one.

When a BAF (equity) says that the fund has been growing despite a monthly withdrawal @9% p.a, is there any harm by selling the fund advising the investor to do the systematic monthly withdrawal at the rate of 9% p.a.

Great explanation Sir. Because of monthly dividends, this topic is discussed to a great extent. Earlier, dividends used to be of any frequency. Even then also, annual or half yearly dates were almost fixed for some schemes. I think its frequency which matters. As long as yield remains in the range of 8 to 11 % p.a. I dont see that big problem as projected in various forums. Personally I believe in Growth option only.

Sir, You are correct to large extend but plz. elaborate little more that if investor is coming with dividend charm along with his/her investment allocation in other asset class with some extra exposure in these type of funds then what risk they may be carrying with them !

Great research done by Sunil Jhaveri Sir on this very relevant issue of current times..he has gone indepth to provide a very clear picture..investments in SWP+growth have delivered 2.5 times more which is an eye opener for many of us..thanks Sir once again for the efforts taken to educate the IFA community..misselling must be avoided at all costs otherwise it will come back to haunt the culprit one day..

Super Analysis by Sunil (Mr Bond) as always, I was there at the Wealth Forum conference where this was discussed in detail and as said 90% of those present felt this was mis selling even then this option continues to get maximum inflows, I am getting many queries from clients asking to invest in a particular scheme which is paying out 1% dividend, mind you these are clients who are mostly senior citizens who have NEVER invested in Equity or balanced funds it is just spreading by word of mouth, some have understood my objections and have not invested others who do not need advice (read DIY) have anyway gone and invested via their friendly neighborhood banker. Lets wait and see the party cannot last forever. However doing away with dividend option altogether is something I do not agree on, all options should be open for the investor. I sometimes wonder your name should be changed to Mr Equity Sunil hows that :)

Simply superb. Sunil Jhaveri deserves a salute from every IFA

Well explain. However, two questions: 1. How will this analysis look like if the cash flow requirements and dividends are same. 2. Impact of tax and exit load on SWP?

Very will explained with solid data as usual .