Financial Daily from THE HINDU group of publications
Saturday, Nov 26, 2005
Financial Daily from THE HINDU group of publications Saturday, Nov 26, 2005 |
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Mutual Funds Markets - Mutual Funds Fidelity moots liquid FoF Nilanjan Dey
Kolkata , Nov. 25 FIDELITY Mutual Fund has sought regulatory approval for an open-end cash fund of funds (FoF) scheme. The proposed Fidelity MultiManager Cash Fund, which will seek to provide returns commensurate with low risk while offering a relatively high level of liquidity, will mainly invest in liquid products of other MFs. It may also invest in money market instruments and bank deposits in order to meet redemption requirements. The fund, to be benchmarked against Crisil Liquid Fund Index, will create a basket of underlying schemes chiefly on the basis of internal reviews of their performance and characteristics of their portfolios. Investing in Fidelity MultiManager will involve certain risks generally associated with making investments in the underlying schemes, the offer document filed with SEBI has stated, adding that its value may be affected by factors influencing the underlying schemes' performance. The latter is linked to factors such as volatility in the fixed income markets, interest rates and exchange rates. Under normal circumstances, 95 per cent of the net assets will be allocated to various liquid funds. Depending on the circumstances, up to 20 per cent can be invested in money market instruments/bank deposits - as a means of managing liquidity. Not more than 25 per cent of the net assets will be parked in a particular underlying scheme, Fidelity MF has mentioned. Liquid funds aplenty
Fidelity MultiManager, the third product to have been mooted by Fidelity MF (after Fidelity Equity Fund and a yet-to-be-launched tax-saving plan), will have a wide range to choose from, thanks to the great variety of liquid schemes available in the market. Virtually every fund house offers these products, complete with multiple choices aimed at retail and institutional investors.
These include the 40 or so liquid products listed by Value Research (non-institutional, under the `Debt - Ultra Short Term' category), which as on November 24 have delivered an average 2.6 per cent on a six-months basis. The three- and one-month figures are 1.3 per cent and 0.44 per cent, respectively. The institutional variety too is quite diverse, thanks to efforts by the asset management industry to garner wholesale money. Some fund houses have sought to differentiate their products by using tags such as `Super Institutional' and `Premium'. These include Franklin Templeton, HDFC and Kotak.
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