The Hindu Business Line : HSBC MF moots gilt scheme

HSBC Mutual Fund has mooted a scheme dedicated to Government securities that will offer investors two investment plans namely short-term and long-term.

The MF's views on interest rate movements and the nature of the two plans will be reflected in the maturities of securities in which investments will be made, the offer document sent to the Securities and Exchange Board of India for clearance has mentioned.

The proposed HSBC Gilt Fund will try to provide reasonable returns by allocating to G-secs of various maturities. In normal circumstances, the short-term plan is likely to have an average maturity of not more than seven years and a modified duration of not more than five years.

The portfolio of the long-term plan, aimed mostly at investors who have surpluses for medium-to-long periods, will normally have an average maturity of not more than 20 years. And the modified duration in this case will not be over 12 years.

The latest proposal is expected to add to HSBC MF's repertoire of debt schemes. As of now, the fund has products in the liquid and income categories; as for the latter, there is a scheme for institutional investors as well.

HSBC Income Fund, according to the mutual fund's July fact-sheet, G-secs accounted for around 49 per cent of the net assets, followed by PSU bonds (24 per cent) and corporate debt (21 per cent). In the G-sec segment, the highest allocation of nearly eight per cent was made to 7.55 per cent GoI 2010.

HSBC Institutional Income Fund had around 47 per cent in G-secs, while PSU bonds and corporate debt took up 29 per cent and 17 per cent, respectively. The top G-sec holding was 7.4 per cent GoI 2012, which accounted for about nine per cent of the assets.

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