As the net asset values of mutual funds plummeted, the spirits of equity fund investors slumped too as they bore the brunt of the fluctuating market scenario. While this fall has been attributed to the uncertainties evolving on a global scale and the fall of domestic growth in the country, investors of dividend yield mutual funds found themselves happy and safe in spite of the recent market circumstances. This is because these funds outperformed their equity counterparts, protecting themselves against the unsustainable behavior of the market. While many investors do not understand the true value of these funds, dividend yield funds are an excellent source of income for investors, that have provided stellar results time-after-time.
Dividend yield funds make investments in organizations that offer high dividend yields and a healthy cash flow. Thus, these funds make investments in sound organizations that are consistent in their earnings and performance in the industry. These funds lack the element of volatility, and are able to hold themselves when the market goes through uncertainty. Also, dividend received from these organizations is summed up with the earnings of the scheme. Thus, when the market experiences a downfall, valuation of companies fall and subsequently, their yields rise. This is the reason why dividend yield funds perform in a superior manner as compared to other equity funds. Today, these funds are targeting investments in financial, energy, and FMCG organizations. As a prudent investor, before making an investment in dividend yield funds, evaluate their performance over a period of approximately 6 months, and you will get an answer. With the current behavior of the market, it would be safe to invest a part of your portfolio in dividend yield funds. These funds are best suited for those investors who would like to play with equity funds, without burning their hands in the element of risk. Aggressive investors can also decide to direct a part of their investments in these funds for the purpose of safety, instead of solely focusing on growth-oriented funds.
While making an investment in dividend yield funds, you must remember that these funds should not be bought for the purpose of a steady or regular income. You will receive regular funds only if you select the dividend option of the scheme, as they depend on the returns offered through capital gains. Thus, keeping the current unstable scenario of the market, investing in dividend yield funds may be quite a good idea after all!
Obviously, you do not want to be losing out on your finances and opt for debts like personal loans, home loans etc to finance your requirements in the eventuality of a wipe out in the market which could have happened due to an investment decision going wrong or simply because it was a bad market day. Therefore in order to ensure the safe keeping of your finances, choose your funds wisely and choose them on a varied set of parameters and not only based on their past returns. Doing so you will get a complete idea as to how your funds need to be invested and once you manage to structure your portfolio using a diversified pursuit is what is supposed is required. Diversification enables your portfolio to gain from robust returns thereby enabling you to categorize your funds returns on the basis of short term, medium term and on a long term basis. Therefore do not take hurried decisions since a little research from primary sources can give you the advantages which you otherwise might miss out forcing you to look into other avenues which might not be as profitable as it can be.