ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Elss Mutual Fund: Dividend Reinvestment Vs Growth Option

Updated on July 1, 2011

In ELSS mutual funds, it is possible to convert the sub-option from dividend reinvest to dividend payout and vice versa but when I contacted Reliance Mutual Funds, they said it is not possible due to 3 years of lock-in period so what’s next?

With reinvestment, your dividend is reinvested which means you get more units. It also means you pay any dividend distribution tax on the dividend whereas in growth, the number of units remain the same. As far as the equity oriented funds are concerned, as of now both the options don’t make any difference.

Switches between Growth and Dividend plans are equivalent to redemption in the source plan; and fresh purchase (entry-load waived) into the target plan. Here, you will have to shell out that 0.25% STT; and bear capital gains taxation (depending on how long you had been investing in the fund).

Then it follows that in case of all other open ended funds, you can freely (well, subject to STT and tax considerations) switch across.

It also follows that in case of an ELSS investment, you cannot switch freely from Growth to Dividend due to the lock in period of 3 years.

In case of closed-ended funds, the AMC will have stolen all your freedom - the question of switching between Growth and Dividend does not arise at all.


On the other hand, switches between sub-options within Dividend plan, i.e., Dividend Payout, Dividend Reinvestment are allowed irrespective of whether the fund you invested in is a normal open ended equity fund or ELSS. This is because you are continuing to be a holder under the Dividend plan itself. The source and target are the same: "Dividend". Then, where is the validity for the concept of "redemption in source/fresh purchase in target"?

Mine and my office colleagues’ experiences with Reliance Customer Care revealed that (over the phone 022 30301111) there can't be any useless Mutual Fund Department on the earth than Reliance Customer Care of Reliance Money. They just don't know why they are there, or what they do, or what the customer asks for, or what they need to provide to the customer. Several of my friends have logged complaints on their folios over the past many months and to get them addressed, we have to meet the Regional Head, Delhi, in person that should be talking volumes about what they are up to.

Please ensure that you have spoken to someone who is more competent than those customer care executives. Perhaps your Chartered Accountant could clarify things to you in a much better detail.

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)