Make Your Own Dividend Fund Strategies -A look At Semi Passive Dividend Income Fund
Dividend funds traditionally follow passive fund strategies. These funds tend to limit their portfolio churning and save on the transaction and management costs, while capitalizing on the dividend earnings as the primary sources of returns from the portfolio.
The result is a low cost, low risk and a low yield portfolio.
Such funds are suitable for investors who have very low risk appetite and would be willing to invest their funds for a very long time. However, in the short to medium term such funds are not always popular; during times of rising interest rates an investor may find that he could get a better yield investing in a debt fund than a pure passive dividend yield fund given the same level of risk.
Thus, the popularity of these funds is limited to times when the general economic conditions are down, the business activity is low and interest rates are also falling. This would explain their popularity during these times of economic uncertainty, much like one that has currently gripped the world psyche.
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