Financial Daily from THE HINDU group of publications
Thursday, May 11, 2006
Financial Daily from THE HINDU group of publications Thursday, May 11, 2006 |
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Markets
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New Fund Offer Nilanjan Dey
Kolkata , May 10 Benchmark Mutual Fund, which specialises in exchange traded funds, has lined up two open-ended debt schemes. Benchmark Derivative Plus Fund, which will open for subscription and redemption once a month on the last working day on an on-going basis, will seek to generate absolute returns over and above money market returns by taking advantage in the underlying cash and derivatives markets. The offer document filed with SEBI lists the risk stemming from arbitrage strategies as one of the risk factors. The success of the fund's investment activities will depend on the fund manager's ability to identify opportunities and to exploit price discrepancies in the capital and derivative markets. While various strategies will be used as "return enhancers", the portfolio will comprise equities, derivatives, debt securities and money market instruments. The enhancement techniques will differ in the sense that each method will attempt to exploit a different form of capital, debt and derivatives market pricing and imperfection. In doing so, the investor concerned will be exposed to different forms of risk. The other product, Benchmark Derivatives Opportunities Fund, will also be an open-ended debt scheme that will seek "daily investment results", before fees and expenses, with a view to providing absolute returns by taking advantage of opportunities in the underlying cash and derivative markets. The scheme, the offer document has noted, is aimed at investors seeking long-term capital appreciation chiefly through a diversified portfolio. The idea here is to employ various "flow trading" strategies - exploiting short-term supply and demand imbalances in markets for certain securities - as well as "relative value" strategies, which seek to exploit perceived inefficiencies in the pricing of related securities. Most of these strategies are expected to be in the context of equities and equity indices. This too will offer sale and repurchase on the last working day of each month on an ongoing basis. Likewise, NAV will be declared once a week. The two funds will have units at a face value of Rs 1,000 each. Incidentally, NAVs will be declared once a week.
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