Tata MF eyes ₹1,200-crore mop-up through multi-asset new fund offer

Suresh P Iyengar Mumbai | Updated on February 20, 2020

Tata Mutual Fund targets to raise ₹500-1,200 crore through its multi-cap fund that would invest in commodity derivatives. The new fund offer — Tata Multi Asset Opportunities Fund, and the first in the mutual fund industry to invest in commodities — has appointed Orbis Financial Corp to provide custodial services.

Aurobinda Gayan, Head - Commodities Strategies, Tata Asset Management, told BusinessLine that the fund will invest 65 per cent of the corpus in equity, 10 per cent in debt and 25 per cent across commodity derivatives. The fund’s returns will also be subjected to lower tax rate of equity.

To start with, he said, SEBI has allowed Orbis to provide custodial services in gold, silver, crude oil and natural gas, and hence, the fund will invest only in these products. Over the next six months, custodial services in another 10 commodities are expected to be permitted by the regulator, making the fund to invest across commodities, he added.

The commodity market has the potential to attract investment of about ₹40,000 crore if all the fund houses include commodity derivatives as part of their hybrid schemes, he added.

In agriculture commodities, Gayan said the multi-asset fund will consider investment in soyabean, soya oil, cotton, guar seed and guar gum.

85% for arbitrage segment

Of the overall 25 per cent exposure to commodity, he said, about 80 per cent of the investment positions will be that for arbitrage opportunity which provides safe and predictable returns while the rest will be for direct trading positions.

Diversifying from gold to investment across commodities helps not only beat inflation but also provide safe and superior returns of about 10 per cent to investors. Moreover, Gayan said gold has delivered a compounded annual growth rate of just 4 per cent in the last 10-12 years.

Traditionally, mutual funds were allowed to invest only in gold exchange-traded funds as part of their commodity portfolio. Last May, SEBI allowed mutual funds to invest in exchange-traded commodity derivatives through custodial.

Published on February 19, 2020

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