Daily Dividend Income Mutual Funds Schemes

Debt Mutual Fund category schemes are mainly known for uninterrupted less risky ones which invests in Govt. of India (GOI) Securities, Treasury Bills, Certificate of Deposits (CD), Non-Convertible Debentures (NCDs), Commercial Papers, other Money Market Instruments, etc., and offers better returns alternative to Bank Fixed Deposits (FDs) / Recurring Deposits (RDs) -  [ meaning of these terms given at the end].

These funds are for investors who wants toss park heir money for short period of time, ssay at most 6 months to 1 year.

As per previous historical returns, the percentage you can earn on your investment as like this:sßs

Everyday - 0.01% to 0.02%

1 Week - 0.3%

3 Months - 0.82% to 0.98%

6 Months -  1.5% to 2%

1 Year -  3% to 8%

Given below are proofs:##

Overnight Fund

Following are Daily IDCW  [Income Distribution cum Capital Withdrawal] which are reinvested on day-today basis:

DAILY      IDCW                               RE-INVESTMENT	DEBT CATEGORY	NAV	MATURITY  PERIOD	Inception
HDFC Overnight Fund	Overnight Fund	1042.66	1 day	07-02-2002
Aditya Birla Sun Life Overnight Fund	Overnight Fund	1000.02	1 day	01-11-2018
Axis Overnight Fund	Overnight Fund	1000.503	1 day	15-03-2019
Kotak Overnight Fund	Overnight Fund	1004.757	1 day	12-02-2019
Nippon India Overnight Fund	Overnight Fund	100.005	1 day	17-12-2018
ICICI Prudential Overnight Fund	Overnight Fund	100.0005	1 day	15-11-2018
UTI Overnight Fund	Overnight Fund	1370.862	1 day	03-04-2014
PGIM India Overnight Fund	Overnight Fund	1000	1 day	27-08-2019
Mirae Asset Overnight Fund	Overnight Fund	1000	1 day	22-10-2019
Canara Robeco Overnight Fund	Overnight Fund	1001	1 day	24-01-2019
Edelweiss Overnight Fund	Overnight Fund	1008.113	1 day	18-09-2019
Canara Robeco Liquid Fund	Liquid Fund	1005.5	91 days	11-07-2008
Parag Parikh Liquid Fund	Liquid Fund	1000.54	91 days	11-05-2018
Mirae Asset Cash Management Fund	Liquid Fund	1066.435	91 days	13-01-2009
Axis Liquid Fund	Liquid Fund	1001.4	91 days	09-10-2009
HDFC Liquid Fund	Liquid Fund	1019.82	91 days	10-10-2005
Canara Robeco Ultra Short Term Fund	Ultra Short Duration Fund	1240.71	3 to 6 Months	11-07-2008
Aditya Birla Sun Life Savings Fund	Ultra Short Duration Fund	100.5983	3 to 6 Months	05-06-2007
HDFC Money Market Fund	Money Market Fund	1063.64	1 Year	26-12-2001
Nippon India Money Market	Money Market Fund	1003.679	1 Year	15-06-2005
Axis Money Market Fund	Money Market Fund	1005.613	1 Year	06-08-2019
Axis Banking & PSU Debt Fund	Banking and PSU Fund	1039.014	Nil	08-06-2012

Example of Money Market Fund:

Liquid Fund IDCW 

Overnight Fund IDCW:

Thank you for investing with PGIM India Mutual Fund !

We wish to confirm that a IDCW of INR 0.104500 per unit has been declared in PGIM India Overnight Fund - Regular Plan - Daily IDCW on 27/01/2022. The IDCW amount payable to you has been reinvested in the scheme under above mentioned Folio.

More Proofs of Debt MF schemes which are reflecting in my Portfolio:

   You will not see negative returns even single day.

Where your money get invested through Overnight / Liquid Debt Mutual Fund Schemes?

A) GoI dated securities (G-Sec)

Government Securities are securities issued by Central Government to borrow from financial market to meet its fiscal deficit. Securities are issued for short term as well as long term. 

Short term securities with maturity less than 1 year are called Treasury Bills (T-Bills) while 

Long term securities with a maturity of one year to max. of 40 years are called Government Bonds or Dated Securities. They are considered as safe investments, as Investors are guaranteed return of both interest and principal, from Government of India.

B) Treasury Bills (T-Bills):

Treasury bills or T-bills, which are money market instruments, are short term debt instruments issued by the Government of India and are presently issued in three tenors, namely, 91 day, 182 day and 364 day. 

Treasury bills are zero coupon securities and pay no interest. Instead, they are issued at a discount and redeemed at the face value at maturity. For example, a 91 day Treasury bill of ₹100/- (face value) may be issued at say ₹ 98.20, that is, at a discount of say, ₹1.80 and would be redeemed at the face value of ₹100/-. 

C) Certificate of Deposit (CD)

Certificate of Deposit or CD is a fixed-income financial instrument governed under the Reserve Bank and India (RBI) issued in a dematerialized form. The amount at payout is assured from the beginning. 

A CD can be issued by any All-India Financial Institution or Scheduled Commercial Bank. They are issued at a discount provided on face value.

 Like a fixed deposit (FD), a CD’s purpose is to denote in writing that you have deposited money in a bank for a fixed period and that bank will pay you interest on it based on the amount and duration of your deposit.

Here are some salient features of CD’s and how they compare to other financial instruments.

a) CDs can be issued in India for a minimum deposit of ₹1 lakh and in subsequent multiples of it.

b) Scheduled Commercial Banks (SCBs) and All-India Financial Institutions are eligible to issue a CD. Cooperative Banks and RRBs cannot issue a CD.

c) CDs issued by SCBs have in term period anywhere between 3 months to a year.

d) CDs issued by financial institutions have a term period ranging from 1–3 years.

e) There is no lock-in required for a CD.

f) One cannot issue a loan against a CD.

g) A certificate of deposit is fully taxable under the Income Tax Act.

h) A CD cannot be publicly traded.

i) Banks are not permitted to buy back a CD before its maturity.

D) Non-convertible Debentures (NCDs):

NCDs are fixed income instruments issued by corporates to raise  long term funds through public issues. They are issued for a specific tenure of, say, one to seven years and pay interest periodically or at end of maturity.

Debentures are long-term financial instruments issued by a company for specified tenure with a promise to pay fixed interest to the investor. 

Debentures are of two types, namely convertible debentures and non-convertible debentures (NCD).Non-convertible debentures (NCD) are those which cannot be converted into shares or equities. NCD interest rates depend on the company issuing the NCD.

NCD investment can be held by individuals, banking companies, primary dealers other corporate bodies registered or incorporated in India and unincorporated bodies.

The tenure of NCDs can be anywhere between 2 years and 20 years, thereby providing better maturity opportunities.

An NCD loses value when interest rate in the system goes up and gains when the interest rate declines. However, when the NCD is held until maturity, one is likely to realize the promised return and the risk due to movement in interest rates is eliminated or minimized.

NCDs are rated by certified and professional credit rating agencies [CARE, CRISIL. ICRA].

NCDs are generally listed securities hence one can sell them in the secondary market before maturity.

There is no tax deduction at source (TDS) on NCDs offered in DEMAT mode and listed on a stock exchange as per section 193 of the IT Act.

Amount invested by a single investor is as decided by the company and varies with the issuances. Usually investors can start investing with amounts as low as Rs 10000/‐.

One could look at different interest payout options offered by NCDs such as monthly, quarterly, half‐yearly or annual interest payments.

As per section 193 of the Income Tax Act, 1961, there is no tax deduction at source (TDS) from any securities issued by a company, in a dematerialized form and listed on a recognized stock exchange in India. However, NCDs allotted to non‐resident Indians (NRIs) will be subject to TDS as per section 195 of the Income Tax Act, 1961.

For individual investors, if the NCDs are sold before a year, the profits will be added to the income of the investor and he will have to pay taxes at the same rate as per the income tax slab. For any profit made by selling NCDs after a year, tax will be paid at 10%, if indexation is not done or 20% if the indexation is done.

E) Commercial Papers:

A Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note. With a view to enable highly rated corporate borrowers to diversify their sources of short-term borrowing and also provide an additional instrument to investors, RBI introduced Commercial Papers as a money market instrument in the Indian financial market in 1990.

Commercial paper can be issued into the market by the following members:

• Leasing and Finance Companies
• Manufacturing Companies
• Financial Institutions

Companies, Primary Dealers (PDs) and Finance Institution (FIs) are eligible to issue commercial paper. Commercial Paper (CPs) can be issued based on the guidelines set by RBI. The following conditions have to be fulfilled by corporates to receive privileges for issuing commercial paper:

• The tangible net worth of the company should not be less than 4 Crores, as per the latest audited Balance-Sheet.
• The companies should have the ‘sanctioned working capital limit’ by the banks or any Financial Institutions (FIs).
• The Financial Institutions or Banks should classify the ‘Borrowable Account’ as a Standard asset.

Commercial paper can be issued if:

• The maturity is a minimum of 7 Days and a maximum of one year from the date of Issue.
• Commercial paper should not be provided if the credit rating is beyond the date of its validity.
• The denomination for issuing commercial paper must be Rs.5 lakhs and its multiples.
• A single investor should not invest an amount more than Rs. 5 lakh.

Minimum Credit rating should be AAA to obtain CP by the company.

Note: Dividends which are paid are already taxed and bear by fund house.

If sold before 3 years from purchase date, short term capital gain tax will be applicable. Any profit will be clubbed with your income and taxed at your effective tax slab rate based on your income status.

If sold after 3 years from purchase date, long term capital gain tax will be applicable. Current tax rate is the lower of (a) 10% of profit or (b) 20% of profit adjusted after indexation benefits. Any cess/surcharge is not included.