What Happens to Dividends Received by a Mutual Fund?

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A common question asked by investors is : what happens to the dividends that equity mutual funds receive from the stocks they have invested into? The reason why investors ask this query is over the fear that AMCs (mutual fund companies) do not pass on these dividends to their unitholders and pocket that amount for themselves. In this video, I explain what really happens to these dividends and where these dividends are applied by the mutual fund companies

Equity mutual funds primarily invest in stocks of different companies and therefore receive dividends, where applicable. These dividends don't go into the unitholder (investor in a mutual fund scheme) bank account but goes in as cash into the AMC's account and gets added to the NAV. But this is just a temporary parking of the dividends and when the fund manager finds the right opportunity, he would use that money to buy more shares in existing portfolio companies or new companies as the case may be

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Disclaimer: I am not a SEBI registered investment advisor or research analyst. The content posted on this platform is purely for educational purposes and none of it constitutes investing or trading advice. Viewers should do their own research and diligence before investing or acting on the information presented