Skip to main content

ING Dividend Yield Fund

Invest Mutual Funds Online

Download Mutual Fund Application Forms

Why do you buy stocks / equity oriented mutual funds? Your obvious response would be to generate capital appreciation, right? Don't you find this question a bit bizarre? However, the basic purpose of buying stocks seems to have been forgotten these days – and that is to get a share in company's profits by way of dividend. Dividend yield is nothing but dividend per share which you receive, as against the market price at the time of your investment. Thus if we have to obtain it mathematically; it is simply the dividend per share divided by the market price at the time of your investment.

Dividend yield funds invest in stocks which have a consistent record of dividend distribution and have a higher dividend yield at the time of investing. It is believed that companies which distribute higher dividend are slow growth companies and hence they usually trade at a discount to their fair value. After all everyone wants to chase 'growth', and stocks with high dividend yield are often overlooked in the broader market. But if you are a long-term investor and look at investing in the equity markets traditionally (by eyeing a share in the profits of the company), dividend yield stocks, or even dividend yield mutual funds is a good investment avenue for you. At least the track record of funds investing in high dividend yield stocks says so.

Here let's talk about ING Dividend Yield Fund (IDYF). It is an open-ended diversified equity fund from the stable of ING Mutual Fund. Launched in October 2005, the fund has been in existence for over 6 years now.

Investment Objective and Proposition

The fund's primary investment objective is "to provide medium to long term capital appreciation and / or dividend distribution by investing predominantly in equity and equity related instruments, which offer high dividend yield". And as a mandate, IDYF invests 65%-100% of its total assets in equity and equity-related instruments of high dividend yield companies, upto 35% in other equity and equity related instruments and rest (i.e. upto 25%) in debt instruments and cash.

Portfolio Characteristics

In the last one year, the fund's investment in large-cap stocks has been in the range of 53%-77%, while that in mid-cap and small-caps has been in the range of 19%-40%. IDYF has refrained from taking any aggressive cash calls as revealed by its cash and cash equivalent holdings which is in the range of 4%-11%.

By following a defensive investment strategy by investing in high dividend yield stocks, IDYF adopts a value style of investing. Moreover, while undertaking its stock picking activity the fund pays attention to the following factors:

  • Business fundamentals
  • Management competence
  • Growth prospects

Past performance is also considered, but essentially focuses on long-term fundamental driven values.

Equity Portfolio

Holdings

Oct 2011

Nov 2011

Dec 2011

Jan 2012

Feb 2012

Infosys Ltd.

5.7

6.0

5.9

5.6

6.1

ICICI Bank Ltd.

2.3

2.3

2.3

5.1

5.5

State Bank Of India

2.3

2.2

2.1

2.5

5.3

HDFC Ltd.

5.4

5.2

5.4

5.5

5.0

ITC Ltd.

7.4

7.4

8.0

5.2

4.8

Tata Motors Ltd.

3.1

2.9

2.8

3.7

4.3

Tata Consultancy Services Ltd.

2.7

3.0

2.6

3.5

3.4

Tata Steel Ltd.

2.2

1.8

1.6

2.5

3.1

Bosch Ltd

2.1

2.6

3.0

3.1

3.1

Bank Of Baroda

2.3

2.2

2.2

2.3

2.9

 

As per the portfolio disclosed on February 29, 2012, the fund holds in all 43 stocks. Top-10 stocks constitute 43.6% of the portfolio, while its exposure to top-5 sectors has been 46.4% of its total portfolio. As on February 29, 2012, the large caps accounted for 77.0% of the portfolio and midcaps formed 19.3% while it held 3.7% in cash and equivalent assets. The fund manager of IDYF has not indulged in momentum playing, but instead preferred to stay invested as evident by its petite portfolio turnover ratio of 0.73 times. Dividend yield of the fund as on February 29, 2012 was 2.29%.

 

How IDYF has fared vis-à-vis its peers?

Scheme Name

6-Mth (%)

1-Yr (%)

3-Yr (%)

5-Yr (%)

Std. Dev. (%)

Sharpe Ratio

ING Dividend Yield (G)

2.0

4.6

38.7

15.9

7.03

0.34

Tata Equity P/E (G)

7.3

5.5

33.5

14.6

7.39

0.30

UTI Dividend Yield (G)

2.8

4.3

30.7

16.0

5.89

0.32

Principal Dividend Yield (G)

5.6

4.6

30.5

9.9

6.96

0.27

SBI Magnum Contra (D)

0.3

-1.9

22.1

7.6

7.89

0.19

BSE-200

3.3

-0.9

27.5

7.3

8.14

0.22

 

The table above reveals that IDYF's performance has been quite luring. The fund has outperformed the benchmark index, BSE 200, across time frames, and has clocked returns of stunning 38.7% & 15.9% CAGR over the 3-Yr and 5-Yr respectively, as against the 27.5% CAGR and 7.3% returns generated by its benchmark BSE 200 over the similar time frame.

When assessed on the volatility front, IDYF has exposed its investor to a low risk (as revealed by its Standard Deviation of 7.03%), and has been successful in clocking attractive risk-adjusted returns (as revealed by its Sharpe Ratio of 0.34) as well. In fact with the Sharp ratio of IDYF being higher than the one clocked by its benchmark, we can say that the fund has handsomely rewarded its investors by managing its risk well. This thus makes the fund a low risk- high return investment proposition.

 

Year-on –Year Performance

Scheme Name

30/Mar/07
To
31/Mar/08

31/Mar/08
To
31/Mar/09

31/Mar/09
To
31/Mar/10

31/Mar/10
To
31/Mar/11

31/Mar/11
To
20/Mar/12

2007-08

2008-09

2009-10

2010-11

2011-12 (YTD)*

ING Dividend Yield (G)

21.6

-31.8

117.4

17.5

-2.5

BSE-200

24.1

-41.0

92.9

8.1

-8.1

 

Further even if we assess over how the fund has performed on a year-on-year basis, the table above makes it evident that barring the year 2007-08; IDYF has outperformed its benchmark in 4 out of last 5 years.

 

Performance across Market Cycles

BULL PHASE

BEAR PHASE

BULL PHASE

CORRECTIVE PHASE

Date Range

24-Oct-2005
-
09-Jan-2008

09-Jan-2008
-
09-Mar-2009

09-Mar-2009
-
05-Nov-2010

05-Nov-2010
-
20-Mar-2012

ING Dividend Yield (G)

32.4

-51.2

102.8

-9.4

BSE-200

56.8

-59.0

84.4

-13.3

 

It is noteworthy that the exuberant bull market of 2005-08 made a mockery of dividend yield stocks as well as mutual funds investing in such stocks. Dividend Yield Funds were completely bulldozed by sector and growth oriented funds, as everyone was chasing 'growth', and 'value' wasn't available either. But then began the bear market of 2008-09, which took the Indian equity markets into a tizzy. Growth stocks melted under the heat of heavy selling, funds investing in such stocks doomed (in fact fell more than their benchmark with of course a few exceptions), and investors' too lost faith. In our view, chasing 'growth' investors' were looking foolish while being bullish. But an interesting observation; when the Indian equity markets went into a tizzy, value funds and dividend yield funds in particular, regained their lost fame and IDYF was no exception to this.

The table above tells us how painful the first 2 years have been for IDYF. The fund underperformed its benchmark, BSE 200, by a significant margin. However, since then the fund has managed to break the shackles, and in the last bull phase as well under the corrective phase has been consistently performing well by beating its benchmark across market phases.

 

Fund Manager Profile

Name of the Fund Manager

Mr Danesh Bharucha

Total Work Experience

N.A.

Managing the fund since

Mar-12

Qualifications

B.com, MBA(Finance)

 

As seen above the performance of ING Dividend Yield Fund has been extremely attractive, notably over last 5 years. The fund has not only beaten its benchmark, BSE 200 but also its peers. It has managed to outpace the competition quite convincingly by generating returns in excess of those generated by the category as a whole over 3-Yr and 5-Yr period. The fund generated 40.8% and 16.0% over 3-Yr and 5-Yr, as against the category average of 34.7% and 11.4% over the respective time frames. Consistent performance year after year has made this fund a compelling proposition for those who wish to invest in a value style fund and also want to earn regular dividend income. Needless to say, no mutual fund can guarantee you any dividend though they might exhibit a track record of distributing dividends regularly. Thus given the consistent performance and also appealing portfolio characteristics, we believe the fund is worth a buy.

 

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

 

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

 

Best Performing Mutual Funds

    1. Largecap Funds:
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    3. Mid and SmallCap Funds
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    4. Small and MicroCap Funds
      1. DSP BlackRock MicroCap Fund
    5. Sector Funds
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    6. Gold Mutual Funds
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

Popular posts from this blog

Mutual Fund Exit Load Changes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Mutual Fund Exit Load Changes AMCs don't communicate about any change in exit load directly with investors, but do update on their website   The exit load applicable to your investments is the load which existed at the time when you invested in the particular fund. Any subsequent changes in the exit load will not be applicable to your investments.   However, Asset Management Companies ( AMCs ) periodically publish addendums in the newspapers, which state any change in exit loads of specific schemes managed by them. Such changes are also posted on their websites. However, a direct communication to an investor is not made, considering the costs involved in doing so. In their own interests, investors should not only track the performance of the funds they i...

Atal Pension Yojana contribution Tax Benefit for spouse

Contributions to Atal Pension Yojana (APY) are eligible for the same tax benefits as the NPS. This means that the contributions can be claimed under Section 80CCD (1B). The current limit for Section 80CCD (1B) is   Rs   50,000, over and above the   Rs   1.5 lakh limit under Section 80C. Section 80 CCD (1) is a different one, meant to cover employers' contribution towards NPS . You cannot get tax benefit by investing in the name of your spouse under Section 80 CCD . ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in India for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Religare Tax Plan 4. DSP BlackRock Tax Saver Fund 5. Franklin India TaxShield 6. ICICI Prudential Long Term Equity Fund 7. IDFC Tax Advantage (ELSS) Fund 8. Birla Sun Life Tax Relief 96 9. ...

Birla Sun Life Mutual Fund Launches Birla Sun Life NIFTY ETF

Birla Sun Life has launched a new fund namely, Birla Sun Life Nifty ETF, an open ended exchange traded fund. The new fund will be open for subscription from 4th July to 18th July 2011, at an offer price of Rs 10 per unit. The investment objective of the scheme is to generate returns that closely correspond to the total returns of securities as represented by S&P CNX Nifty, subject to tracking errors. No exit load will be charged under the scheme. The performance of the scheme will be benchmarked against S&P CNX Nifty and will be managed by Satyabrata Mohanty.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   1) DSP BlackRock Mutual Funds: http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html   2) Reliance Mutual Funds: http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html   3) Birla Sunlife Mutual Funds: http://prajnacapital.blogspot.com/2011/...

Mutual Fund Reivew: Birla Sun Life Asset Allocation Conservative

Birla Sun Life Asset Allocation Conservative has numbers on its side to prove its credibility… Don't be surprised to find this Fund of Funds ( FoF ) in our recommendations. It has earned its place. And despite the difference in the structure of the product, there is no arguing with the numbers.   Of the total 6 years of its existence, the fund has been among the top 10 funds in its category in four of them. Last year it put up an average show and the only year it underperformed its peers was in 2008.   One aspect to look at when investing in an FoF is the expense ratio. The expense ratio of an FoF is capped at a lower limit of 0.75 per cent (2.50% for an actively managed fund). However, the FoF not only has its own expense (though lower) but even the expense ratio of the fund it is investing into. Fortunately, the fund manager takes that into account. "Expense is one of the important criteria used for fund selection and is the main reason for our investment in BSL Ind...

Short-Term Investment Options in Mutual Funds

Mutual funds offer liquid funds and ultra short term funds in the debt category, which are suitable for short investment periods. Ultra short-term funds were earlier known as liquid plus funds. Liquid funds invest in money market instruments with a maturity of 91 days or less. However, there are no such restrictions for ultra short-term funds. Who should invest in these? These are open-ended schemes. Investors with a short investment horizon or with surplus cash and low risk appetite should look at these. These could include corporate as well as retail investors. Those interested in staying invested for less than 15 days can opt for liquid funds. Retail investors who want to remain invested for two-four months, can look at ultra short-term funds. The short duration for both liquid and ultra short-term funds shields them from any interest rate volatility.   What kind of returns do they offer? In terms of an investment period less than 15 days, these funds are comparable to a ba...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now