Low NAV Adds To Decline In Bond Fund Dividends

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: The open-ended bond funds, which usually give an investor high dividends, are failing to fulfill investor’s expectations, thanks to low net asset value (NAV) of the schemes. The NAV has declined due to lacklustre market conditions.

Since dividends are a function of NAV performance, it has become difficult for the funds to dole out huge dividends. Bond fund schemes of Kotak Mahindra, Pioneer ITI and Prudential ICICI were expected to give high dividend payout. But the NAV of most of the bond funds schemes are around the per unit value of Rs 10.

Kotak Mahindra’s K-Bond Wholesale Plan has declared a dividend of Rs 0.320 per unit and the NAV of the scheme was 10.44. Similarly, the K-Bond Deposit Plan declared a dividend of Rs 0.320 and had a NAV of 10.52.

Birla Sun life announced dividend on its quarterly bond funds. Birla Income Plus declared a dividend of Rs 0.300 per unit and the NAV of the scheme stood at 10.42. Birla Bond Plus declared a dividend of Rs 0.15 per unit, with the NAV of the scheme at 10.08.

But Pioneer ITI declared a surprisingly low dividend on Pioneer ITI-IBA (monthly) scheme despite a good performance of the scheme. It declared a dividend of Rs 0.10 per unit on IBA monthly scheme. But the NAV of the scheme was at 14.29. On the IBA (quarterly) scheme, the dividend was 0.30 per unit wherein the NAV was 14.35. On the Pioneer ITI MIP (monthly), the dividend was Rs 0.075, but the NAV was 10.67. But on the Pioneer ITI MIP (quarterly) scheme, the dividend declared was Rs 0.0225 and the NAV of the scheme stood at 10.96.

Prudential ICICI also did not offer good dividend as its schemes are doing badly.