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Will mutual funds offer regular dividends now?

If you have any mutual fund queries, message on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.

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Last Updated: Mar 31, 2020, 03.36 PM IST
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I am a senior citizen. I have investments in various mutual funds, in monthly dividend option. Now my funds' NAVs are down 30%. I want to know whether mutual funds will give regular dividends like earlier?
-Arvinda Mody


According to Sebi regulations, mutual funds can declare dividends only out of the realised profits. In other words, mutual funds will be able to declare dividends only when the markets are doing well and they are earning profits. As you said in your message, the market is down by more than 30% in the last one month. There are no clear views when the market would bounce back. Everything depends on how the world tackles the coronavirus pandemic and how the global economy performs after that. In short, it would be a while for the market revival and regular dividends from mutual funds.

This is the reason why most investment experts do not recommend mutual funds to draw a regular income, especially the primary income. Most investment experts recommend Senior Citizens Saving Scheme and Post Office Monthly Income Scheme to retirees to get a regular income from their investments. It is okay to use mutual funds to draw secondary income.
(If you have any mutual fund queries, message us on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.)

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