The Hindu Business Line : Tata Mutual plans Multiple Yield Fund

TATA Mutual Fund has mooted an open-ended income scheme that will offer separate plans to investors with different investment horizons - short, medium and long.

The proposed Tata Multiple Yield Fund will chiefly invest in debt and money market instruments, while moderate exposure will be taken to equity and equity-related securities in various proportions.

The fund will come with three plans, A, B and C. Plan A will try to provide positive returns with low risk of capital loss over a short-to-medium time frame. Plan B and Plan C will aim at generating returns over medium and longer periods of time.

Equity allocation for the three plans can be a maximum 10 per cent, 25 per cent and 35 per cent respectively. The proportion of investment in money market instruments may be raised to 100 per cent of the resources available in order to attain the investment objectives and protect unitholders' interest, the offer document filed with SEBI has mentioned. Such a strategy will essentially help in providing liquidity and preserving capital.

As for equity exposure, the fund manager will try to follow a dynamic allocation strategy, with emphasis on well-managed companies that have above-average growth prospects, ones that can be purchased at a reasonable price.

In normal market circumstances, the equity allocation is likely to be around 15 per cent of the net assets.

Predecessor in HDFC

The new proposal has a predecessor in HDFC MF's Multiple Yield Fund, which was first launched in September 2004 and was recently followed up with Multiple Yield Plan 2005.

The HDFC MF product, which according to Value Research is aimed at investors with a "medium" time frame, can have a maximum equity exposure of 25 per cent, the minimum being 15 per cent. It has provided about 9.97 per cent returns since launch. As on October 31, its net assets stood at Rs 766 crore.

HDFC Multiple Plan 2005, on the other hand, has posted 2.35 per cent returns since its introduction in August. This scheme aims to provide positive returns to those with holding periods of about 15 months, Value Research has noted.

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