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, with an aim to create wealth through capital appreciation and dividend income.
The fund will invest in companies that offer dividends and demonstrate consistent growth, the company said in a press release. It will focus on companies with predictable and stable cash flows, managed by teams that prioritize regular rewards to shareholders.
The investment approach involves a “rigorous” five-stage screening process to build a portfolio of reasonably priced, low-cap companies, while actively avoiding potential dividend traps.
“Dividend-paying companies tend to have a higher average return on equity than non-dividend-paying companies. In fiscal year 2024, these dividend-paying companies had an average ROE of [return on equity] “20.5 percent versus 13.4 percent for non-dividend paying companies,” said Suresh Soni, chief executive 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 seeks promoter alignment with minority shareholders, as evidenced by consistent dividend payments.
Below are the details of the BNP Paribas dividend fund:
Schema name: BNP Paribas Dividend Yield Fund. The new fund offering is scheduled to open from 22 August to 5 September 2024.
Investment objective: The plan aims to invest in companies with predictable and stable cash flows, led by managements that prioritize rewarding shareholders with regular dividends. The focus is on investing in growing companies that also reward investors through regular dividends and buybacks.
Schema type: An open stock plan
Fund Manager: Shiv Chanani will manage this new fund.
Benchmark: The scheme will be benchmarked against the Nifty 500 – TRI.
Minimum application amount: The minimum investment amount is Rs 1000 and thereafter in multiples of Rs 1. The minimum investment amount for daily, weekly and monthly SIP is Rs 500 and thereafter in multiples of Rs 1.
Load structure: The applicable exit load will be nil if up to 10 per cent of the plan units are redeemed or exchanged within one year from the date of allotment. An exit load of 1 per cent will apply if plan units in excess of the limit are redeemed or exchanged within one year from the date of allotment. If plan units are redeemed or exchanged after one year from the date of allotment, the applicable exit load will be nil.
First published: August 22, 2024 | 11:33 am IS
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