Unlike regular equity securities that pay dividends, mutual funds make or pay distributions. Though the name may differ, the substance is the same.
The only difference is that the declaration and payment of dividends by companies is optional as it depends on the management of the company to decide to declare and pay dividend or to plough back the money into the company’s business, whereas, in mutual funds,most laws require that distributions be made at least once a year and most fund prospectuses contain information on the frequency of payment.
So, when you invest in mutual funds, you are almost always sure to receive a distribution each year, unlike equity investments.
Unfortunately, not all mutual funds in Nigeria have lived up to that avowed obligation. One of those that have been faithful with distribution payment is the DV BALANCED FUND.
In its latest distribution notice, the fund manager announced that it has decided to pay a distribution of ₦23 per unit to unit holders whose names appear in the register of unit holders of the fund as at 5.00 pm on Tuesday April 24th, 2018.
Consequently, the register would be closed at 5.00 pm on Tuesday April 24th, 2018 in preparation for the payment scheduled to take place on Friday, April 27th, 2018. The fund had paid ₦2.00 as interim distribution earlier in the year.
It will be recalled that the fund made a final payment of ₦.02 per unit in June 2017 after an interim payment of ₦.50 per unit in February same year. In 2016 also, the fund paid ₦.10 in December as final payment.
About DV Balanced Fund
The DV Balanced Fund is an open-ended mutual fund that seeks to invest in a range of securities, including quoted equities, fixed income securities and money market instruments. Using an asset mix strategy that aims to achieve consistent growth primarily from a well-diversified portfolio of stocks and mitigate volatility associated with Nigerian equities market, the fund places itself in a strategic position to keep up the distributions.
The fund launched on August 26th, 2014 at a price of ₦100 per share but is now valued at ₦112.24, representing an inception to date unrealized capital gain of 12.43%. If you had invested in the fund at launch date, you would have recovered ₦25.62 of your initial investment through the distributions.
The fund, whose investment strategy is the selection of securities based on a detailed investment policy focused on value investing, return/yield maximization, prudent diversification and risk management, is suitable for prudent investors with medium risk appetites who wish to achieve capital appreciation over time, especially investors with medium to long term investment horizons. The fund charges a 1.5% management fee and a 1% penalty if you redeem within 90 days of investment.
ACAP Income Fund Too
In the same vein, ACAP Income Fund, for the third consecutive quarter, distributed 13% income to existing shareholders for the quarter ended December 31st, 2017 in fulfillment of the fund manager’s commitment to deliver a minimum of 13% payout to fund holders. For those holders whose registrations are not up to date, the distribution would be reinvested into the fund for them.
About ACAP Income Fund
ACAP Income Fund is managed by Alternative Capital Partners Limited and it invests in guaranteed fixed income and money market securities. Its objective is to encourage savings and investment culture with competitive returns above conventional savings products. It takes ₦5,000 to invest in ACAP income fund.
The fund recorded a performance of 81% in 2017 and is currently returning 4.2% in 2018. ACAP Income Fund was originally known as BGL Nubian Fund, but was taken over by Alternative Capital Partners Limited following approval from shareholders in March 2017.