Financial Daily from THE HINDU group of publications
Saturday, Jun 25, 2005
Financial Daily from THE HINDU group of publications Saturday, Jun 25, 2005 |
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Markets
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Mutual Funds Reliance Mutual unveils arbitrage fund Our Bureau
Kolkata , June 24 RELIANCE Mutual Fund has lined up a scheme to invest in a combination of equities, derivatives, debt, and money market instruments. The proposed Reliance Arbitrage Advantage Fund will be offered to investors with three plans, each with a growth and a dividend option. The first (Plan A) will try to provide capital appreciation and income generation by allocating mainly to debt and the rest in equity and equity-related securities including derivatives. Plan B and Plan C will seek to furnish capital appreciation and income generation by investing in equity and equity-related securities, including derivatives, and the balance in debt securities. According to the offer document filed with SEBI, the fund may use various derivative products from time to time for the purpose of hedging and portfolio rebalancing. Incidentally, Crisil Liquid Fund Index has been selected as the benchmark index. It may be mentioned that JM Equity & Derivative Fund is the only product in this genre. The scheme, launched in February this year, has, inter alia, allocated to FDs, bonds/NCDs, and liquid assets. All the plans would look for arbitrage opportunities in the equity market by investment in instruments like futures and options. The equity exposure will be hedged in the futures and options market to earn the positive cost of carry/arbitrage. "In all the plans, the debt component under normal market conditions shall be invested in fixed-income securities and other money market securities. The scheme may also invest its net assets in derivatives like interest rate swaps, forward rate agreements, and other such instruments as permitted by the RBI and SEBI from time to time," the offer document said. Unit holders will be provided with trigger options - value- and NAV-based triggers - that lead to a stop loss or a gain cap.
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