Is return on dividend mutual funds lower than growth funds?

[ron94]

In equity funds, company declaring dividend has to pay 17.65% ddt and then mutual fund has to pay 10% ddt. So over a 1yr period, wouldn’t returns of dividend mutual fund be much lower than growth funds?

[Bhuvan]

@ron94

In equity funds, company declaring dividend has to pay 17.65% ddt and then mutual fund has to pay 10% ddt. So over a 1yr period, wouldn’t returns of dividend mutual fund be much lower than growth funds?

Always go for growth. Check this post for more.

Why dividend option is the worst way to get mutual fund returns

Have seen a lot of people wanting opting for dividend when investing in mutual funds. This article by Dhirendra Kumar explains why it is maybe the worst way to get mutual fund returns. Mutual fund dividends need to die. They should be abolished and replaced by specially designed withdrawal plans that investors can choose according to their needs. That sounds like a radical suggestion but actually it’s not because financially, there is already no such thing as dividends in mutual funds. What are…

[ron94]

Thank you for the swift reply. On zerodha coin, for dividend funds, CAGR is calculated after accounting for NAV adjustment post dividend right? Eg: taking Kotak standard multicap direct growth and comparing it to the direct-dividend plan, Growth has 10% return over 1 yr and dividend has 3.42% return. So in the dividend option, rest of gain is from dividend. But for comparing b/w the two plans, where can I find how much dividend has been paid over the last one year and convert that to %terms after deducting ddt. I need readymade information, calculating returns after ddt, not the dividend history schedule.

[Bhuvan]

@ron94

Thank you for the swift reply. On zerodha coin, for dividend funds, CAGR is calculated after accounting for NAV adjustment post dividend right?

Yes.

@ron94

where can I find how much dividend has been paid over the last one year and convert that to %terms after deducting ddt. I need readymade information, calculating returns after ddt, not the dividend history schedule.

There is no single source for this data. You will have to manually collate this from the fund announcements.

[ron94]

So, can I safely say that returns from dividend mutual funds will be lower by about 12% (after grossing up, surcharge and cess) of the amount of dividend declared when compared with growth mutual funds?