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Nilanjan Dey

Kolkata , Feb. 15

MUTUAL funds seem to be taking the old dictum - India lives in villages - to heart.

Reliance MF and Sundaram MF have mooted funds aimed at capturing the growth being recorded by the rural economy.

Reliance Agri Fund and Sundaram Rural India Fund will both have diversified portfolios made up of companies that operate in the rural domain.

The first will be benchmarked against the BSE 100 and the second against the BSE 500 index.

Among the sector's key attractions are its role in the GDP, employment-generation capacity and contribution to exports and the possibility of large-scale investments in rural projects, the fund houses have pointed out.

Reliance Agri Fund, which will come with separate plans for retail and institutional investors complete with growth and dividend options, will be free to invest 100 per cent of its net assets in equities if necessary, the offer document filed with SEBI has mentioned.

The allocation to debt too may be scaled up to 100 per cent if necessary.

The idea is to invest in securities of companies (equity as well as fixed income) belonging to the agri and associated sectors.

This will include agri commodities, food processing, agri implements and fertilisers. Moreover, investments may well be made in FMCG companies that generate revenues from the rural market as well as financial services entities that operate in the agri segment.

The possibility of Centre permitting FDI in retail has also been cited.

This, the MF has noted, is likely to be a positive for the agri sector as large retail chains may source directly from farmers.

Sundaram Rural India Fund will try to identify companies that are focusing on the domain; at least 70 per cent of its assets will be allocated to equities under normal circumstances.

Mr T.P. Raman, Managing Director, Sundaram MF, said the fund was mooted earlier and has now been re-sent to SEBI for fresh approval.

The offer document refers to a Rs 18,000 crore-plus plan allocation for rural development.

Also, specific reference has been made to key components of rural infrastructure - irrigation, roads, water supply, housing, electrification and telecom connectivity. Huge investments in agriculture and rural development are envisaged, it is pointed out.

Any company that generates a turnover from rural areas to the extent of 10 per cent will be deemed as an eligible company for investment in this scheme, the offer document has mentioned.

More Stories on : New Fund Offer | Mutual Funds | Agriculture | Rural Development

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