The Hindu Business Line : Tata MF to launch rural India fund

Tata Mutual Fund has lined up an 18-month close-ended equity fund that will seek to invest mainly in equity and equity-related instruments of companies that are focused on `rural India'.

Christened Tata Rural India Fund, the scheme will be automatically converted into an open-ended fund on completion of the 18-month period. During its close-ended avatar, the net asset value will be determined normally once every week.

Later, on conversion, it will be ascertained on all business days as in the case of other normal open-ended funds. Post-conversion, there will be an entry load of 2.25 per cent for each investment (other than by way of systematic investment plan) of less than Rs 2 crore.

The fund will aim at generating "consistent long-term returns", the offer document filed with SEBI has mentioned, adding that the Government has been increasingly attending to rural development and earmarking large outlays for the sector towards agriculture, employment and infrastructure.

Under the Bharat Nirman Scheme, for instance, over Rs 18,000 crore has been provided in the fiscal 2006-07 Budget. The resources are mainly aimed at water supply, irrigation, roads and housing construction, rural electrification and telecom connectivity.

The themes that are said to offer good investment opportunities include agriculture (covering irrigation, contract farming, fertilisers, processed foods etc), infrastructure (construction, cement, telecom, power etc) and consumption (FMCG, appliances, health care etc).

It may be mentioned here that Tata MF's latest idea is not the first relating to schemes focused on rural India. Sundaram MF has done it earlier, while one or two others, including Deutsche MF, have worked out similar concepts.