Tata Mutual Fund has launched a floating rate fund —an open-ended debt scheme predominantly investing in floating rate instruments. The new fund offer, which opened for subscription on Monday, will close on July 5.

The fund will invest a minimum 65 per cent of its corpus in floating rate securities issued by corporates or government or convert fixed interest securities to floating via derivatives.

Akhil Mittal, senior fund manager at Tata Asset Management said with inflation remaining high, further cut in interest rate is unlikely. The RBI will most likely reduce the excess accommodation and would address liquidity and rate corridor (difference in reverse repo and repo) first and follow up with rate movement.

However, the RBI will stay put on current accommodation in this fiscal and any sort of normalisation will start only after 6-9 months. Reverse repo is expected to gradually rise and come back to normal band of 25 bps below repo rate from the current band of 65 bps below repo rate, he said.

“It is imperative that we manage our positioning and duration in such a way that any policy change or rate movement has lesser impact on our investments and we move with broader directional change in market,” he said.

Pharma ETF

Meanwhile, Nippon India Mutual Fund has launched Nifty Pharma Exchange Traded Fund. Subscription of the fund will close on June 28 and reopens for continuous re-subscription on July 12.

The scheme will provide returns close to the total returns of the securities as represented by the Nifty Pharma index before expenses, it said.

Also read: Nippon MF appoints Rupesh Patel and Hideaki Masago to key positions

The fund will invest 95-100 per cent in securities constituting the Nifty Pharma Index while 0-5 per cent in money market instruments including tri-party repo on government securities or T-bills, cash and cash equivalents or liquid schemes.

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