scorecardresearchWith 15.39% returns in 5 years, Templeton India Equity Income Fund tops

With 15.39% returns in 5 years, Templeton India Equity Income Fund tops its category; Should you invest?

Updated: 30 May 2022, 04:11 PM IST

This fund is best for those looking to benefit from dividend yields and capital appreciation.

Dividend yield along with capital appreciation marks dividend yield funds different from most other funds in the market.

Dividend yield along with capital appreciation marks dividend yield funds different from most other funds in the market.

Investing in dividend funds can be a great way of making money. This is why many people invest in dividend yield funds that invest in equity stocks of companies known to declare high dividends. Though it is not mandatory for all companies to declare dividends, some of them offer dividends to encourage investors to park money in their stocks. Considering that only companies making high profits announce dividends, investing in these funds exposes investors to the benefits of parking money in companies announcing high returns every year.

Take, for example, the Templeton India Equity Income Fund – Direct-Growth with impressive historical returns growth over the past five years compared to its peers. The risk factor in this fund is moderately high as per the guidelines stipulated by the Securities and Exchange Board of India (SEBI).

The fund size is approximately 1245.95 crores, which means that the fund house has enough resources to put into research and management. Roughly 76.35 per cent of the fund’s investment is in Indian stocks of which 58.13 per cent is in large-cap stocks, 13.82 per cent in mid-cap stocks with the remaining 0.85 per cent shifted to small-cap stocks. Since the majority of this fund is invested in equities, investors must continue to park their money for a prolonged period to earn good returns.

Templeton India Equity Income Fund – Direct-Growth

Launched on January 01, 2013, this dividend yield fund charges a 1.64 per cent expense ratio. This expense ratio is considerably high when compared to most other funds one can justify these charges by looking at the consistency of the returns earned over the past five years. The trailing returns from this fund over the years are

Fund NameOne-year returnsThree-year returnsFive-year returnsReturns since inception
Templeton India Equity Income Fund – Direct-Growth23.72%22.39%15.39%15.07%
Category funds14.35%16.09%11.15% 

The fund is benchmarked against the NIFTY Dividend Opportunities 50 Total Return Index and must be bought with a long-term view, preferably for an investment period beyond three to five years.

The minimum amount you can invest in this fund is 5000 in a lump sum while you can make an added minimum investment of 1000 in a lump sum in this fund. The minimum investment you can make through SIPs is 500. This fund does not attract any exit load, which means that investors have nothing to lose post-fund redemption.

Fund performance

Many investors inquire why they must invest in this fund more than any other. A comparative analysis of most income funds in this category underscores the exceptionally high returns that investors have earned by investing in it.

Scheme Name1-year Returns3-year Returns5-year Returns
Sundaram Dividend Yield Fund - Direct Plan-Growth8.64%14.50%12.65%
UTI Dividend Yield Fund - Direct Plan-Growth6.73%14.57%11.56%
ICICI Prudential Dividend Yield Equity Fund - Direct Plan-Growth19.03%15.66%10.91%

Staying invested for a prolonged period yields returns exceeding most other bonds and government securities. This you can achieve by investing in this fund through systematic investment plans over a period ranging from 10 to 15 years.

Tax angle

If the units of this fund are redeemed within a year of investment, the gains from this fund are subject to short-term capital gain tax (STCG), i.e., 15 per cent.

Long-term investors redeeming their investments after one year will be exempted from tax on gains up to 1 lakh. More than 1 lakh gains would be subject to long-term capital gains tax, i.e., 10 per cent. There is no cess or surcharge on the funds sold before or after one year.

Disclaimer: Mutual funds are subject to market risks. Please read the offer document carefully before investing. Also, the Securities and Exchange Board of India has stipulated the latest guidelines categorising this fund under the “Moderate Risk” category.

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First Published: 30 May 2022, 04:11 PM IST