I am not getting Dividend on my mutual funds because of cut offtime issue ?

POSTED BY MAYUR KUMAR ON January 2, 2015 11:34 am COMMENTS (14)

Hi, I have purchased UTI – Money Market Fund (Instn Weekly Dividend – Direct) on 3rd Dec 2014 before 2PM(Cut off time). Amount is 4 lakhs. The purchase transaction processed on Previous day NAV (2nd Dec 2014) Rs 1015.95 . On same Previous day(2nd Dec 2014), there is a dividend announcement on this scheme.

But dividend is not applicable, since dividend declared on 2nd Dec 2014 before cut off time. If an investor made purchase in liquid fund on Dec 3rd 2014 before cutoff time,NAV applicable date is 2ndDec 2014 but Dividend is not applicable announced on 2nd Dec 2014. I have got the above confirmation from UTI Mutual fund. Is this correct? please let me know

If this not correct, where can i lodge complaint. Let me know

My investment 4 lakhs rupees blindly came down to Rs 3,99,441.58.This is because of dividend announcement. My question is Where is my money Rs 558.42 went?

Regards Mayur.

14 replies on this article “I am not getting Dividend on my mutual funds because of cut offtime issue ?”

  1. MAYUR KUMAR says:

    Thanks alot Hemanth. UTI has agreed to credit dividend after send email to gladston@uti.co.in.
    I would like to say Thanks to Jagoinvestor Forum also.
    So if an investor purchase Liquid fund with Previous day NAV ,then he is eligible for Previous day Dividend also if dividend announced on previous day.

    Below is the UTI reply,

    Sir,

    The purchase units processed with NAV dated 02/12/2014 hence you are eligible for the weekly dividend paid on 02/12/2014, The error is highlighted in our monthly reconciliation and dividend is already processed in your folio the revised SOA attached for your reference.

    The dividend amount of Rs 473.21 will be credited thru direct credit tomorrow

    Regards
    Mayur

    1. Thats great to know Mayur !

  2. MAYUR KUMAR says:

    Manish,
    Previous day NAV applicability for liquid finds is correct,I AGREE.But no one is talking about what happens if there is a dividend announced on that same previous day?Will the investor get the Previous day dividend or not?If yes,No problem.
    If no, then where is that money going?And investor will be always loser.

  3. Mayur

    How does it matter much if you are not getting dividend ? The dividend is given and then the worth of mutual fund comes down anyways.

    Like if you had invested Rs 50,000 and suppose you getting Rs 10,000 as dividend , then your worth of Mutual funds will anyways be Rs 40,000 . If you dont get it, then your mutual funds worth is Rs 50,000

    So why are you so worried if you dont get it, you dont loose anything ..

    Read this article for more – https://www.jagoinvestor.com/2008/04/mutual-funds-options-growth-dividend.html

    Manish

    1. MAYUR KUMAR says:

      Hi Manish,

      In liquid funds ,there is Previous day NAV concept.
      Let’s say if you purchase a liquid fund Rs 50000, today(Jan 2nd 2015) before 2PM(CUT OFF TIME),then Transaction is processed with Previous day NAV(Jan 1st 2015).
      On Jan 1st 2015,there is also dividend announcement of Rs 10.

      For Example,
      JAN 1ST 2015 NAV value is 100. Dividend of Rs 10 is announced.
      Jan 2nd NAV VALUE IS 90.

      In this scenario , On Jan 2nd 2015,My Rs50000 is processed with Previous day NAV 100 ,GOT 500 Units. This is correct because I purchased before CUT OFF Time,PreVIOUS DAY NAV is applicable.
      On Jan 2nd , my worth reduced to Rs45000/-. I didn’t get dividend because I purchased on Jan 2nd and dividend announced on Jan 1st.Is this correct? Who is getting Rs 500 dividend?
      If this is correct, Anyone who purchases Liquid fund on the day after dividend announcement date will always be loser. And who will be the gainer?

      Regards
      Mayur.

      1. In that case I think you need to directly talk to AMC and if required , also file a RTI asking for reasons ..

        Manish

        1. MAYUR KUMAR says:

          Manish,
          Yes i have contacted UTI AMC.
          UTI has given written reply that “You have purchased in liquid fund on Dec 3rd 2014 before cutoff time, NAV applicable date is 2ndDec 2014(Previous day) but Dividend is not applicable announced on 2nd Dec 2014,since dividend declared on 2nd Dec 2014. I have got the above confirmation from UTI Mutual fund.

          If UTI reply is correct,then investors is always lose the money when he invest in a liquid fund immediately next day before 2PM of Dividend announcement date.
          This could be applicable to Annual dividend liquid mutual fund scheme also.

          How do i know UTI REPLY IS CORRECT OR NOT?Is there any Mutual fund expert that i can ask?

          1. The best you can do is using RTI , file a RTI to SEBI on this and you will get the right reply

            Manish

        2. MAYUR KUMAR says:

          Manish,
          Previous day NAV applicability for liquid finds is correct .Because it enables us to buy Sunday,Holidays NAV.
          In the case of liquid funds, NAV is declared on holidays and non-business days. For example, NAV is declared for Sunday.
          http://www.thehindubusinessline.com/money-wise/mutual-funds/which-nav-should-apply-to-your-transaction/article2801318.ece

          But they didn’t explain whether dividend of previous day will be applicable or not?I want to clarify with any Mutual fund expert whether UTI reply is correct or not.
          In Case of liquid funds,If previous day dividend is not applicable but previous day NAV is applicable, then then investors is always lose the money.Does SEBI knows about it?

          1. Hi Mayur

            Here is a snapshop from NISM exam book which is for mutual funds advisors. As per that, previous day NAV is applicable if you buy it before 2 pm and funds are released. I think its business days and not holidays

            1. MAYUR KUMAR says:

              Manish,
              Previous day NAV applicability for liquid finds is correct,I AGREE.But no one is talking about what happens if there is a dividend announced on that same previous day?Will the investor get the Previous day dividend or not?If yes,No problem.
              If no, then where is that money going?And investor will be always loser.

            2. Hemanth says:

              Did the UTI customer care said whether u will get dividend or not ?

            3. MAYUR KUMAR says:

              UTI Customer care said – NO,I will not get dividend because dividend declared on 2nd Dec 2014 and i have purchased on 3rd Dec 2014 even though 2nd Dec 2014 NAV is applicable for this purchase transaction. I have got the above confirmation from UTI Mutual fund.

              My question here is that is UTI reply is correct or not?
              Does SEBI is aware of this or not?and this Previous day NAV is also applicable for all SBI AMC,HDFC,ICICI Prudential AMC And all other Mututal fund AMC’s.
              Are all these AMC’s also not giving dividend for purchases on Previous DAY NAV?

              If UTI reply is Correct, i have couple of below questions,
              Even though i didn’t get dividend,then where is that money going?My investment 4 lakhs rupees blindly came down to Rs 3,99,441.58.This is because of dividend announcement. My question is Where is my money Rs 558.42 went?

              Lets Educate all the investors through JAGOINVESTOR that never invest in liquid fund just after the day of dividend announcement before cut off time(2PM).Because Investor always lose money.

            4. Hemanth says:

              Better write to gladston@uti.co.in which is provided in the below link.

              http://www.utimf.com/customerservice/Documents/Grievances_redressal_process.pdf

              Let’s see what they will tell.

              Please keep me updated on this. We shall see.

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