The Hindu Business Line : Benchmark Mutual moots foreign currency fund — Mr Vishal Jain is fund manager of these open-ended liquid schemes

Benchmark Mutual Fund, which specialises in exchange traded funds (ETF), is betting on currency movements that will provide the basis for a pack of three schemes it has mooted simultaneously.

These will invest in overseas mutual funds and foreign debt securities denominated in dollar, pound and the euro.

Benchmark Currency Fund - USD, Benchmark Currency Fund - EUR and Benchmark Currency Fund - GBP will all be positioned as open-ended liquid schemes.

The plan, said Mr Sanjiv Shah, ED, Benchmark MF, was to provide investors, especially those in the HNI and retail categories, an access to another important asset class. "A corporate may be familiar with currency movements and may want to capitalise on them. Ordinary investors may not have the opportunity," he observed.

The schemes will allow diversification at a relatively low cost, it is pointed out.

Benchmark Currency Fund - USD, for instance, will try to provide returns in line with the movement of the Indian rupee versus the US dollar. It will invest in dollar based money market mutual funds and money market instruments.

The offer document sent to SEBI for approval by Benchmark MF has named Mr Vishal Jain as the fund manager. The fund house currently manages half a dozen schemes, including India's first ETF, Nifty BeES.

Under normal market circumstances, each scheme will invest at least 25 per cent of its assets in units and securities issued by overseas MFs and unit trusts denominated in the respective currency. Up to 75 per cent may be allocated to foreign debt, including foreign government securities denominated in that currency. And, there is a provision - up to 25 per cent - for investing in short term money market instruments in India.

Risk management is key: Investors need to particularly take into account risks stemming from currency movements, Mr Shah told Business Line while referring to the schemes' investment universe comprising securities denominated in foreign currencies.

"At the end of the day, we are not really considering interest rate risk or credit risk", he said.

Fluctuations in the value of dollar, pound and euro relative to the Indian rupee will be important for unitholders, he added.

The schemes will invest in AAA or equivalent rated units of overseas mutual funds and other securities.