Principal Dividend Yield Fund

Principal Dividend Yield Fund is not a great performing funds in its category. This fund is managed by Dhimant Shah. New investors can skip this fund for a better performing fund in this category. Existing investors can hold and keep a close watch on its performance.

Where does Principal Dividend Yield Fund invest your money?

Principal Dividend Yield Fund is a multi cap fund which means your money will be invested in stocks of companies having high dividend yields, without any market cap bias. Large cap companies tend to be stable compared to mid cap and small cap companies. This fund has 39% exposure to large companies, 35% exposure to medium size companies and about 18.64% exposure to small size companies. Large cap companies tend to be more stable compared to mid cap companies but kicker returns come from mid cap and small caps.

Suitable for what?
  • Creating wealth
  • Lifestyle needs 
Not Suitable for?
  • Child's education
  • Child's marriage
  • Planning for retirement
  • Short term needs
How much to invest?

Minimum one time investment is Rs 5,000 and minimum SIP is Rs 500. Do not make Principal Dividend Yield Fund as part of your core portfolio. Core portfolio includes investments that are made for your basic goals and makes up about 70% of your investment portfolio. Principal Dividend Yield Fund can be part of your satellite portfolio. Do not make the mistake of investing in too many mutual fund schemes. At any point of time do not have more than two mutual fund schemes in your core portfolio.

Our recommendation for fresh investment
Not Recommended
Our recommendation for existing investment
How has Principal Dividend Yield Fund performed in the past?

If you had invested Rs 1 lakh when the fund was launched at Oct 2004, your value of investments would be around Rs 2.47 lakhs. If you had invested Rs 1 lakh five years back it would have become Rs 1.27 lakhs. The performance has been not better than or similar to other large cap mutual funds. The fund has been giving at around 5.03% every year for those who stayed invested for last 5 years.

Assume you had invested Rs 10,000 every month in Principal Dividend Yield Fund through SIP for the past 5 years today you would have around Rs 7.85 lakhs.

How will Principal Dividend Yield Fund perform in the future?

Needless to say no one can predict the future of markets. We have firm belief in the future prospects of the Indian economy. If the Indian economy grows at 9% then the leading companies tend to do well. When the companies do well their stock prices follows their performance. So if you expect the economy to grow at 8% then you can expect top performing mutual funds to give you returns in excess of 14%.

Mutual fund schemes that have exposure to mid size companies tend to show results when their bet on few companies comes true. We advise you to avoid too much of star gazing and future prediction. Be reminded that equities are one of the asset classes that have the potential to beat inflation. Your aim for core portfolio should be to beat inflation.

What charges apply?

If units are sold within a year an exit load of 1% is deducted from your total returns. No exit load applies for units withdrawn post one year. Expense ratio of Principal Dividend Yield Fund is 2.66%. This is charged to recover the fund management company’s expenses on securities’ transactions, commissions, registrar fees, etc. Your mutual fund returns will be total returns less expense ratio.

When to exit?

Withdraw when your goals are close to achievement. Do not remove the money when the markets go up or down. Do not panic. Stick to your goals.

What are the tax implications?

The returns in an equity mutual fund are absolutely tax free, provided you do not withdraw within 1 year. Principal Dividend Yield Fund does not qualify for sec 80C ELSS benefits.

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