Dividend Yield Funds: Is Your SIP Underperforming?

Dividend yield mutual funds had very mixed results in the last year. Only two funds beat 10% returns while several others lagged badly. Portfolio choices and fund expenses made a huge difference. Here is what you need to know before investing.

Here's what happened: Only two dividend yield mutual funds delivered returns above 10% over the past one year, while most of the category trailed significantly.. Wide differences in equity allocation strategy and stock selection within each fund's portfolio drove the large performance gap across the category.. Higher expense ratios in some funds compounded the underperformance, silently reducing net returns for investors even before market volatility is considered..

What you should do: Check your dividend yield fund's 1-year and 3-year returns on AMFI's website and compare them against the category average — not just absolute numbers.. Review the expense ratio of your fund; switch to a direct plan if you are currently in a regular plan, as it can save 0.5%–1% annually.. Avoid assuming dividend yield funds give you regular dividend income — returns are from capital appreciation, so ensure this aligns with your actual financial goal..

Pro tip: Within the same mutual fund category, top and bottom performers can differ by 5–8% annually — always compare peer funds before adding fresh SIP money.

For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.