Know smart things about dividend transfer plans
1. The scheme allows a unit holder to opt for an automatic transfer of dividend declared by a mutual fund scheme, called the source scheme, to the target scheme.
2. The source and target schemes are specified by the mutual fund and may be either equity or debt plans.
3. The DTP may be used by an investor to book profits and rebalance the portfolio away from equity. A debt fund investor can increase returns by taking a minimal equity exposure.
4. The dividend from the source scheme is transferred on the next day after the record date at the target scheme's NAV. Accordingly, equivalent units are allotted to the target scheme.
5. An investor has to enroll for DTP with the mutual fund using the specified form. Any investment in the target scheme will be subject to KYC compliance and PAN provisions.
6. While cancelling this arrangement, the investors should indicate their choice-dividend reinvestment or dividend payout option.
Source: Economic Times
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