Dividend Yield Funds are a class of defensive equity funds. Equity funds which invest your money in FMCG, IT, Pharma stocks are called defensive funds. These funds are known to give high dividends (a good dividend yield). What is so special about dividend yield funds? In spite of the stock market not doing too well over the last year, dividend yield funds have declined much lesser than their benchmarks.
This makes dividend yield funds a very good investment tool. There is more good news if you are an investor in dividend yield funds. These funds have done better than their benchmarks over the long term. These dividend yield funds are an excellent investment tool if you plan to stay invested in them for the long term (say 3 to 5 years). If you are a conservative investor, then you must definitely consider an investment in dividend yield funds.
Why Dividend Yield Funds Are Good For You? Dividend Yield Funds are very resilient when the stock market falls. This protects your investment in bad times. What is good is, stocks which pay good dividends continue to pay dividends even when stock markets are not doing well. Stocks which pay good dividends do not fall much in price. They maintain a consistent price level. These Dividend Yield Funds invest in Companies with a sound business model and good fundamentals. These Companies generate good profits and also a surplus, which they give out as dividends.
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