1. When you compare dividend option and growth option of any scheme, then you always find that growth funds are the winner in bull phase of the market. Because in bull phase of the stock market, most of the stocks get a higher valuation and NAV of growth scheme high, and we see an attractive current portfolio value when we compare it to dividend option.
2. In opposite side, you know dividend payout funds are the winner when market correct more than 30 % because in this situation past dividends are consider as profit bookings.
3. Today we compare dividend reinvestment option with growth option because they look like same. So if you read this article carefully then you understand the difference in growth option, dividend reinvestment option and dividend payout option in any mutual fund scheme.
4. For example, we choose Franklin India Prima Plus plan and see this comparison sheet which provided by Shri Vineet Agarwal:-
7. So:-
(1) From Jan 2000 to Sept 2016 SIP of 1000 per month in Franklin India Prima Plus plan growth option NAV value of units is INR 15,65,344.
(2) From Jan 2000 to Sept 2016 SIP of 1000 per month in Franklin India Prima Plus plan Dividend option we get INR 385887 as NAV value of units and INR 298756 as dividend, so total NAV value+dividend is 6,34,644
(3)From Jan 2000 to Sept 2016 SIP of 1000 per month in Franklin India Prima Plus plan , dividend reinvestment option NAV value of units is INR 15,42,689.
(1) From Jan 2000 to Sept 2016 SIP of 1000 per month in Franklin India Prima Plus plan growth option NAV value of units is INR 15,65,344.
(2) From Jan 2000 to Sept 2016 SIP of 1000 per month in Franklin India Prima Plus plan Dividend option we get INR 385887 as NAV value of units and INR 298756 as dividend, so total NAV value+dividend is 6,34,644
(3)From Jan 2000 to Sept 2016 SIP of 1000 per month in Franklin India Prima Plus plan , dividend reinvestment option NAV value of units is INR 15,42,689.
12. Conclusion: - Growth option and dividend re-investment option are near about same, but growth option is slightly winner over dividend reinvestment option so if you want regular tax-free dividend income then choose growth option and use my monthly tax-free dividend idea which I describe in this article:-
How to get Monthly Tax-Free Dividends from Growth Funds
How to get Monthly Tax-Free Dividends from Growth Funds
regards.
Discloser:- I Mahesh Chander Kaushik author of this research report is an existing research analyst and passed NISM certification for research analysts. I am also applied for a grant of registration under SEBI(RESEARCH ANALYSTS) REGULATIONS, 2014 hereby disclose about my financial interest in the subject company and the nature of such financial interest:- 1 Me and my associates or relatives already hold some units of HDFC mutual fund scheme, so my personal interest is included in this scheme. 2. Me and my associates or relatives have/have not any actual/beneficial ownership of one percent or more securities of the subject company(HDFC mutual fund ). 3. Me and my associates or relatives have /have not any other material conflict of interest at the time of publication of the research report. 4. Me and my associates or relatives have/have not received any type of compensation from the subject company(HDFC mutual fund ) in the past twelve months. 5. I am not served as an officer, director or employee of the subject company(HDFC mutual fund ). 6. I have been not engaged in market making activity for the subject company(HDFC mutual fund ).
