Business Daily from THE HINDU group of publications
Wednesday, Sep 06, 2006
Business Daily from THE HINDU group of publications Wednesday, Sep 06, 2006 |
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Markets
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New Fund Offer Our Bureau
Kolkata , Sept. 5 Franklin Templeton MF has mooted a close-ended fund that will intend to protect investors' capital, the first such proposal after SEBI paved the way for capital protection funds. The Franklin Templeton Capital Protection Oriented Fund (FTCPF) will come with two plans, one for three years and the other for five. Each plan, to be redeemed at the end of these periods, will offer growth and annual dividend options. There will be a separate portfolio for each. Rating agency Crisil has given an AAA (SO) rating to the portfolio structure. Units will not be repurchased before the end of the maturity period. FTCPF, the offer document sent to SEBI has mentioned, will endeavour to protect capital by investing in fixed-income securities (its primary objective) and generate capital appreciation by investing in equity and equity related instruments (its secondary objective). NAVs will be normally released at least once a week, it is pointed out. The fund has named Mr Santosh Kamath and Mr Satish Ramanathan as fund managers for the debt and equity portion respectively. The investment objective is to create a diversified portfolio that will minimise liquidity and credit risks. The fund will be benchmarked against the Crisil MIP Blended Index. The three-year plan may have a debt allocation of at least 80 per cent, while the same for the five-year plan may be at least 70 per cent. There will be an "intention to protect the principal at the time of maturity of the respective plans," the offer document has stated. Investments will be made in a portfolio predominantly of fixed-income securities that will generally mature in line with the duration of the respective plans. The debt component will have the highest investment grade rating.
No guaranteed returns
The list of scheme-specific risk factors makes it clear that FTCPF is oriented towards protection of capital and there is no scope for guaranteed returns. Also, the orientation is derived from the portfolio structure and not from any bank guarantee or insurance cover. In fact, the ability of the portfolio to ensure capital protection on maturity may well be impacted by interest rate movements and credit defaults. Besides, there are factors such as trading volumes, liquidity and settlement systems to consider. The rating agency's assessment is not a comment on its NAV in relation to the face value, it is pointed out
More Stories on : New Fund Offer | Investor Protection | Mutual Funds
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