What are Dividend Yield Funds?

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Equity investment and mutual fund investment both are considered result-oriented long-term investment options. However, the two differ fundamentally. Mutual funds are investments made by fund managers who pool together funds from various investors and invest in purchase stocks, bonds, and other assets, on their behalf. Conversely, an equity investment is a direct, individual investment in a company, wherein an investor purchases shares of specific companies trading on the stock exchange. These shares will eventually be traded in the stock market.

Dividend Yield Mutual Funds are a type of equity fund that focuses on investing in stocks and equity-related instruments of companies with a history of paying high dividends. Typically, these funds allocate about 70-80% of their assets to stocks with dividend yields that exceed the market or benchmark average.