Axis Long Term Equity Fund Dividend Option is quite popular among the investors. This fund has been very successful in last few years. It has given best return among the equity linked saving schemes. It is also one of the least risky ELSS.
The Axis Long Term Equity fund dividend option gives dividend almost every year. The dividend is dependent upon decent return. If there is no positive return there would not be any dividend. The dividend gives you back some of your money while capital is locked for 3 years.
Understanding Dividend Option of An ELSS
The dividend in the mutual fund is similar to the dividend of the shares. Like companies declare a dividend from the earned profit, the mutual funds also declare a dividend if it earns the profit. Like a dividend of share, the mutual fund dividend also gives you a regular income.
However, the dividend of a mutual fund is not directly related to the dividend of the companies. Despite dividend from the companies, the mutual fund company can avoid the dividend. But if a mutual fund scheme gives a decent return, it would declare the dividend.
The Benefit of Dividend in ELSS
The dividend option in ELSS (Equity Linked Saving Scheme) is more useful. The money invested in Equity linked saving scheme gets locked for 3 years. But, dividend option of ELSS gives back some of the amounts in the form of a dividend.
With the dividend option of ELSS, you can enjoy both the tax saving and regular income. Among all the tax saving option under section 80C, there is no such scheme which also gives regular income.
Since, ELSS is an equity mutual fund, the dividend distribution tax is not applicable over it. Neither, it is subject to capital gains tax.
The Axis Long Term Equity Fund has given Rs 2 and Rs 1 dividend respectively in the last two years. This dividend is on the every unit of Axis Long Term Equity Fund.
The Disadvantage of Dividend Option
The dividend option of a mutual fund erodes the maturity value. Since, the dividend is given from the AUM of a mutual fund scheme. Hence, the NAV of the Axis ELSS comes down. The reduced NAV means reduced value of your investment.
The dividend option of the ELSS is not suitable to build the wealth. It does not give you the full profit of the compounding. It is good for regular income.
The dividend option ultimately affects your saving. Because of the small amount, the dividend is often not reinvested. It is spent on unnecessary things. So, you would have less saving for your goal.
The Axis Long Term Equity Fund Dividend and Axis Long Term Equity Fund Growth was started with similar NAV of 10. The money is invested in similar shares. But Axis Long Term Equity Fund growth option has the NAV of 30.6 and Axis Long Term Equity Fund Dividend has NAV of 22.4 . You can see the difference.
Performance of Axis Long Term Equity Fund Dividend
The performance of Axis Long Term Equity Fund Dividend is similar to the growth option. Except the NAV, the return of the growth and dividend option is same. Hence, you can be assured of this. Your money becomes the part of the same Asset under the management of Axis Long Term Equity Fund.
|June 30, 2012 To June 30, 2013||June 30, 2013 To June 30, 2014||June 30, 2014 To June 30, 2015||Since Inception (29 Dec, 2009)|
|Absolute (%)||Absolute (%)||Absolute (%)||Annualised (%)|
|Axis Long Term Equity Fund Dividend||15.88||54.91||33.43||22.60|
|S&P BSE 200||8.69||34.45||12.01||9.03|
The above return has included the dividend. The return of the Axis Long Term Equity Fund remains same irrespective of growth or dividend option.
The Growth Vs Dividend Option of Axis Long Term Equity Fund
As you have seen the dividend option of Axis long term equity fund gives the similar return. There is not any material difference. It can be useful or unuseful for you. It depends upon your requirement.
If you want to build a corpus through investing Axis Long Term Equity Fund or any ELSS, the growth fund would be a better option. Because it gives you the full benefit of the compounding. Your total money remains invested in the scheme.
But, if you want a regular income, the dividend option would be better for you. It would give you regular income as well as some capital appreciation.
Must Read: Best ELSS to Invest in 2016
The History of Dividend Payout
In the history of last 6 years, the Axis Long Term Equity Fund Dividend has paid dividend four times. It could not pay a dividend in 2011 and 2013. These were the year when Axis Long Term Equity Fund had given a negative return. The year 2014 was quite good for the stock market, therefore Axis Long Term Equity Fund Dividend has given a dividend of Rs 2.
|23 Jan 2015||22.29||2.0000|
|06 Jan 2014||13.69||1.0000|
|08 Aug 2012||11.30||0.8000|
|01 Sep 2010||—||1.0000|
Comparison among Dividend Paying ELSS
The dividend option of an ELSS is just an arrangement for some investor. The money goes to the same pool of an ELSS. Therefore, the performance of Axis Long Term Equity fund Dividend option is similar to the growth option of this fund.
|ELSS (Dividend Option)||1 year (%)||3 year (%)
|5 year (%)
|Axis Long Term Equity Dividend||19.89||29.41||19.06|
|Birla Sun Life Tax Relief 96 Dividend||21.32||24.47||10.62|
|Religare Invesco Tax Plan Dividend||14.54||24||13.19|
|BNP Paribas Long Term Equity Fund Dividend||15.44||23.75||13.97|
|Franklin India Taxshield Fund Dividend||18.29||23.45||14.04|
|Birla Sun Life Tax Plan Dividend||20.08||23.29||12.74|
|Tata Long Term Equity Fund Regular – Dividend||18.69||22.43||12.64|
|Edelweiss ELSS Dividend||17.58||21.09||11.23|
You can see the Axis Long Term Equity Fund dividend option is way ahead to its peers. In the 3 years and 5 years period, it has given 5% more return than its nearest competitor. In one year term, it is on the third position, however, the difference is marginal.