We will keep this short and straight.
#1 Renaming of the dividend plan to IDCW
The dividend plans of mutual funds are now called IDCW or Income Distribution and Capital Withdrawal plan.
You see, dividends with mutual funds hardly ever made sense. They only redistribute any money earned via dividends from stocks or interest on debt investments.
Further, even when the markets were down, some hybrid mutual funds continued to give out the same ‘dividends’ as they did in good times.
This could have only happened by using the capital. So, an apt name change which communicates the intent better.
#2 Processing of purchase transactions to happen only when the amount reaches the scheme.
Have you noticed that the purchase date of your SIP different than the date on which you invested?
Since Jan 2021, purchase processing (including SIPs) has undergone a little change for your mutual fund investments. As per SEBI’s directives, only when the money reaches the scheme’s account, will the purchase transaction be processed.
How is it different than before? Well, previously, for amounts upto Rs. 2 lakhs, the processing used to happen on the same day, irrespective of when the money reached the scheme.
Basically, if you invested Rs. 50,000 on Dec 21, 2020 at 2 PM during the day, you would have got the NAV for the same day. In the current scenario, you will get the NAV of the day on which the fund scheme receives the amount. So, if the money actually reaches the scheme on Dec 23, 2020, then that’s the day your investment will be processed and units allotted.
To work around this issue, if you are making a purchase transaction, use NEFT/RTGS payments for transfer of the amount to the scheme on the same day and hence, get you the same day NAV.
Note: In case of SIPs, you may also see that your investing platform is deducting your SIP amount from the bank a day or 2 earlier to ensure that you get the chosen SIP date. If 7th is your SIP date, the amount might get deducted on 5th or even 6th of the month.
Have any further questions? Do write in the comments.