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Dividends from Prudential ICICI

Aabhas Pandya

The Rs 4600-crore Prudential ICICI Mutual Fund has declared a 100 per cent dividend in Prudential ICICI Growth Fund. This translates into a payout of Rs 10 per unit. Based on the net asset value of Rs 31.11 as on March 3, 2000, the dividend plan will provide a 31.66 per cent tax-free dividend yield, adjusting for the entry load of 1.5 per cent.

The asset management company has also decided to dole out a 20 per cent dividend in the Balanced Fund and a 10 per cent dividend in its FMCG Fund. The record date for the payout in the three funds is March 16. So, investors have an opportunity only today.

It will be maiden dividend payouts in the FMCG and balanced funds. Both the funds were launched last year. The payout of Re 1 in the FMCG Fund will yield around 8.5 per cent, based on the sale price of Rs 11.78. The FMCG Fund carries an entry load of 1 per cent. Investments in the balanced fund at the current entry price of Rs 14.95 will give a return of 13.37 per cent.

Besides the entry load, the AMC has imposed an exit load of 2.5 per cent in the three funds in the dividend option for investments between March 8 and March 16, 2000 (both days inclusive). Investors exiting the three funds before May 30, 2000 will have to pay the above exit load.

The AMC has put the exit load to prevent dividend stripping in the funds. Any large outflows after the dividend payout could destabilise funds, especially in a volatile market. This also harms the interest of long-term investors.

Source: Value Research

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