Baroda BNP Paribas Mutual Fund has launched a new scheme called Baroda BNP Paribas Dividend Yield Fund. The open-ended equity scheme will focus on dividend-yielding stocks, aiming to create wealth through both capital appreciation and dividend income.
The fund will invest in companies that offer dividends and demonstrate consistent growth, said the company in a press statement. It will target businesses with predictable and stable cash flows, managed by teams that prioritise regular shareholder rewards.
The investment approach involves a “rigorous” five-stage selection process to construct a market cap agnostic portfolio of reasonably priced companies, while actively avoiding potential dividend traps.
“Dividend-paying companies tend to have a higher average return on equity than non-dividend-paying ones. In FY 2024, these dividend-paying companies had an average ROE [return on equity] of 20.5 per cent versus 13.4 per cent for non-dividend-paying companies,” said Suresh Soni, chief executive officer of Baroda BNP Paribas AMC.
The fund’s features include a focus on companies with higher free cash flow, which often correlates with positive share price performance. It also looks for promoter alignment with minority shareholders, as evidenced by consistent dividend payments.
Here are the details about the BNP Paribas Dividend Yield Fund:
Scheme name: BNP Paribas Dividend Yield Fund. The new fund offer is scheduled to open from August 22 to September 5, 2024.
Investment objective: The scheme aims to invest in companies with predictable and stable cash flows, led by managements that prioritise rewarding shareholders with regular dividends. The approach is to invest in growth companies that are also rewarding investors through regular dividends and buybacks.
Type of scheme: An open-ended equity scheme
Fund manager: Shiv Chanani will manage this new fund.
Benchmark: The scheme will be benchmarked against Nifty 500 – TRI.
Minimum application amount: The minimum investment amount is Rs 1,000 and in multiples of Re 1 thereafter. The minimum investment amount for daily, weekly, monthly SIP is Rs 500 and in multiples of Re 1 thereafter.
Load structure: The exit load applicable will be nil, if units of the scheme are redeemed or switched out up to 10 per cent of the units within one year from the date of allotment. An exit load of 1 per cent will be applicable if units of the scheme are redeemed or switched out in excess of the limit within one year from the date of allotment. If units of scheme are redeemed or switched out after one year from the date of allotment, the exit load applicable will be nil.
First Published: Aug 22 2024 | 11:33 AM IST