MF scheme, Dividend , Growth or Bonus

[manishbyte]

A mutual fund whose aim is to achieve capital appreciation by investing in growth stocks. They focus on companies that are experiencing significant earnings or revenue growth, rather than companies that pay outdividends. The hope is that these rapidly growing companies will continue to increase in value, thereby allowing the fund to reap the benefits of large capital gains. In general, growth funds are more volatile than other types of funds, rising more than other funds in bull markets and falling more in bear markets.

[life2007]

Hello friends

Sorry to possibly ask a dumb question. I am a new investor

After reading forums over here and analysis of DSP ML Equity fund, I find it is one kind of funds where one can invest for long or very long term with relatively less risk.

Would it make any difference if one were to opt for D (dividend) or G (growth) option? I find the Dividend option is existing from April 1997 while the growth fund started only in June 2007.

Please help to clear this doubt.

Thanks

Regards

JEET

[ritz1]

Hi,
Can anyone explain the difference between Growth and Dividend options in MF? Which one is better or preferable in terms of Tax savings MF or any other MF??

[Vicky78]

dividend is payed out by the fund as decided by the fund manager. the nav goes down once the dividend is declared. The advantage is that it is a way of partially booking profits. The disadvantage is that dividend distribution tax has to be paid . (I think it is 10%). In Growth option the money is collected in the end. Here if you remain invested >1 year there is not tax.

One is not better than the other. I personally prefer growth option as i am a very very long term investor.

[surfingminds]

its up to you if you Take Growth option your money will keep growing compounded way. but if you need cash periodic basic you can get through devident option. it depends on you .. no one can advice what is better
but i can surely advice if you don't need money keep it growing as i am not sure if you will utilise the divident as the DSP fund manager would do.

[life2007]

Surfingminds: Thank you

[ankitrastogi82]

Hi,
Can any1 explain the difference and working criteria of three different options in MF
- Growth
- Dividend
- Bonus.

Which one is good and in which scenario like I think, If one is takin NFO of ELSS then Dividend option is good as you will get more units and can get more dividend based on the units.

I dont know if I am right here, please guide me.

[rsalecha]

i totally agree with the explanation given by njoy_deep. In brief you should opt as per your future goals.

[ankitrastogi82]

thanks for your early and well explanotary replies.. I got the picture now for growth and Div..
Is Bonus same as Dividend ?

[Vicky78]

To sum it up

use growth option if you want your returns compounded. This is a more aggressive option as in a rising market it will fetch you greater returns. Similarly in a declining market (like 2000,2001) it will fall harder as the loses are compounded

use dividend payout option if you want to book profits automatically as and when decided by the fund house so that loses are minimized during a declining market.