Financial Daily from THE HINDU group of publications
Thursday, Aug 18, 2005
Financial Daily from THE HINDU group of publications Thursday, Aug 18, 2005 |
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Markets
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Mutual Funds Pru ICICI Mutual Fund plans close-end equity scheme Nilanjan Dey
Kolkata , Aug. 17 CLOSE-END equity fund is being brought back to life, thanks to a move by Prudential ICICI MF to come up with a five-year product. The proposed Prudential ICICI Fusion Fund will have a diversified portfolio aimed at generating long-term growth of capital. It will invest in companies across the market cap range. Unit-holders can avail themselves of repurchase facility at quarterly intervals - on every 15th day from the end of each quarter - which will provide investors with a limited dose of liquidity. The units, which can be redeemed on stipulated days at NAV-based prices, will not be listed on any stock exchange. The fund will mature on completion of the five-year period beginning from the date of allotment. A 5-per cent exit load will be charged if redemption is sought earlier, says the offer document sent to the Securities and Exchange Board of India for clearance. It is expected that most investors will stay invested for the full duration, which should provide them with ample scope to secure decent returns. However, there is no guarantee that investment objectives will be met on the maturity date. Pru ICICI Fusion will "invest in a fusion of stocks across different industries, market capitalisation and sectors," the offer document mentions, adding that it will use "growth investment styles." Under normal circumstances, at least 90 per cent of the assets will be invested in equity and equity related instruments. However, it may move up to 30 per cent in debt securities for defensive considerations. Mr Nilesh Shah, CIO of Pru ICICI MF, has been named as fund manager. At the moment, the fund house does not have a close-end equity product. The equity funds in its stable, including the more recently launched Discovery Fund and Emerging STAR Fund, are all open-end in nature.
Lost genre: Close-end funds
IN terms of sheer numbers and assets under management, close-end funds are clearly in the minority, as the latest data issued by the Association of Mutual Funds in India indicate. Their combined AUM (assets under management) stood at Rs 11,059 crore as on June 30, 2005, far less than the Rs 1,53,487 crore managed by their open-end counterparts. Close-end growth schemes had Rs 1,795 crore with them, compared to Rs 40,666 crore handled by the open-end ones. As for income schemes, the figures were Rs 7,549 crore and Rs 42,338 crore respectively. Interestingly, the trend is reversed in the case of close-end tax-saving (ELSS) funds. The latter actually have Rs 1,021crore, as against Rs 918 crore managed by the open-end ELSS category. During the quarter ended June 30, a number of close-end/fixed-maturity income schemes were launched by MFs such as Birla Sunlife, Franklin Templeton, Standard Chartered and Reliance.
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