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Sundaram Mutual plans to raise ₹150-200 crore through the launch of new Sundaram Equity Savings Fund. The new fund offering will invest in equity, arbitrage and debt. It will be open for subscription between November 16 and 30 and re-open for ongoing subscription from December 14.
Sunil Subramaniam, Managing Director, Sundaram Mutual, said the new fund offer moderates the risk of pure equity with the safety of arbitrage and fixed income, thus giving a wholesome blend of risk and reward while maintaining equity taxation.
Sundaram Equity Savings Fund would follow a three-pronged investment strategy by choosing to invest in equity for capital appreciation, taking hedging or arbitrage investment calls, primarily cash futures arbitrage on individual stocks to enhance income. It will also invest in high credit quality fixed income instruments for consistent income generation.
The performance of the scheme will be benchmarked to the Nifty Equity Savings Index.
Acknowledging that investors have appetite for innovative fund offerings, Subramaniam said last time when Sundaram launched a new fund on the services sector, it was lapped up and the collection was about ₹1,282 crore against the expectation of ₹400 crore. The fund’s AUM currently stands at ₹1,555 crore.
Threat from insurance cos
Sundaram Mutual Fund plans to launch a series of funds including large-cap diversified, multi-cap, balanced advantage and value fund to complete the bouquet of offering.
On the SEBI norms restricting upfront commission to distributors, Subramaniam said even as the distribution community is adjusting to the trail commission model there is a fear in the industry that insurance companies may come out with mutual fund-type of products to attract investment and sell them through distributors by paying upfront commission as it is not banned by IRDA.
Similarly, alternative investment fund and portfolio management service providers may also bring out quasi-mutual fund products to attract investors by offering attractive commissions.
While the industry may take three to six months to work out a sustainable business model under trail commission, the insurance industry is already attracting mutual fund distributors with good offers, he said.
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