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What is a Thematic-Dividend Yield Mutual Fund?

6 Mins 22 May 2023 0 COMMENT

A thematic dividend yield mutual fund is a type of mutual fund that invests mainly in stocks of companies that operate in a specific sector or industry, depending on the fund’s theme. Thematic investment entails concentrating on a specific trend or theme, such as technology, healthcare, or renewable energy.

Moreover, these funds provide investors with regular dividend payments from the stocks in their portfolios. Hence, along with capital appreciation, investors also receive a steady stream of income through dividends as these funds invest in companies that have a history of paying out regular dividends and have a high dividend yield.

Advantages of Thematic-Dividend Yield Funds

There are many advantages of thematic dividend yield mutual funds. Below are some of them:

  • Thematic dividend yield mutual fund invests primarily in dividend-paying stocks with a track record of making regular dividend payments. These dividends are distributed to the investors by the fund house.
  • Dividend Yield Funds make investments in businesses that offer security during market turbulence. These funds tend to outperform smallcap, midcap, and growth-oriented funds in bear markets, which benefits investors. High dividend-yielding companies are less volatile in an underperforming equity market, and as the market stabilises, they deliver gains that are in pace with the market.
  • Fund managers also make investments in less risky companies. These businesses do not heavily rely on loan finance. Fund managers are drawn to businesses with high-interest coverage ratios because they are often low-risk.

How to invest in Thematic-Dividend Yield Funds?

Below are the general steps to invest in thematic dividend yield mutual funds in India.

  • First you should select a mutual fund house that provides Thematic-Dividend Yield Funds. Before investing don’t forget to check the track record of your mutual fund house.
  • Complete the KYC process with the fund house before investing. This involves submitting your identity and address proof documents along with a few other details.
  • Open a mutual fund account with the chosen fund house by filling in the necessary application form and submitting it along with the required documents.
  • Select the Thematic-Dividend Yield Fund that you wish to invest in.
  • After selecting the fund, you can invest in it either through the fund house’s website, mobile app or by visiting their nearest branch. You can choose between lumpsum or systematic investment plan (SIP) options depending on your investment amount and preference.
Disclaimer: ICICI Securities Ltd. (I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code :07730), BSE Ltd (Member Code :103) and Member of Multi Commodity Exchange of India Ltd. (Member Code: 56250) and having SEBI registration no. INZ000183631. AMFI Regn. No.: ARN-0845. We are distributors for Mutual funds. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Name of the Compliance officer (broking): Ms. Mamta Shetty, Contact number: 022-40701022, E-mail address: complianceofficer@icicisecurities.com. Investments in securities markets are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purpose.