The Hindu Business Line : Tata MF moots MIP Floater Fund

The proposed Tata MIP Floater Fund will have at least 65 per cent of its debt assets invested in floating rate securities as well as fixed rate securities swapped for floating rate.

The scheme, like all MIPs, will be free to make limited investments in stocks, the ceiling for equities being 20 per cent. At least 80 per cent of its assets will be in the form of debt and money market instruments.

Investors who wish to opt for the monthly dividend option would be required to put in a minimum amount of Rs 25,000, the offer document sent to the regulator has stated.

Mr S. Sankaranarayanan and Mr Murthy Nagarajan have been named fund managers. The Crisil Blended MIP Index will be the benchmark index for the scheme.

Tata MIP Floater will be the third of its kind mooted by the fund house; the ones introduced earlier were Tata Monthly Income Fund and the more recent Tata MIP Plus. The two schemes, which managed Rs 518 crore and Rs 464 crore, respectively as on May 31, have equity ceilings of 10 per cent and 20 per cent.

Tata MF feels the debt market would remain volatile in the coming weeks as players look at the presentation of the next Budget. The inflation number in the country is expected to breach the five per cent mark, while the Fed rate may be raised from its low of one per cent, a communication from the fund has mentioned. These factors and high energy prices may well put downward pressure on bond yields, with ten-year bonds expected to remain in the 5.2-5.35 per cent range.

It may be mentioned here that the MF already makes serious investments in floating rate securities, courtesy Tata Floating Rate Fund. Launched in late 2003, this scheme (which provides short- and long-term options) seeks to deliver stable returns by following relatively low-risk principles. Its assets stood at Rs 211 crore in end-May. Tata MF has flagged off 17 open-ended products till date.