IIFL debt scheme looks to capitalise on interest rate surge

Scheme launched to take advantage of prevailing environment in debt market following recent action by RBI

The mutual fund arm of IIFL has announced the launch of a debt fund without a lock-in, called the IIFL Short Term Income Fund, which would look to make the most of a jump in short term rates.

Gopinath Natarajan, chief executive officer of IIFL Asset Management Company said that the scheme has been launched to take advantage of the prevailing environment in the debt market following recent action by the Reserve Bank of India(RBI).

“Recent RBI measures to stabilize currency has led to short term interest rates spike to near peak levels in last five years along with inversion of yield curve. In this background, we are pleased to offer an investment opportunity to investors in the form of IIFL Short Term Income Fund. The Scheme will seek to achieve stable returns with focus on higher accrual income at the short end of the yield curve,” he said in a press release.

The fund will invest 80-100% of its assets in debt and money market instruments with a maturity less than three years and between 0-20% in Debt instruments with a maturity of less than five years.

The scheme would have an exit load of 0.5% for those looking to leave the scheme before three months. The fund is open for subscription from August 30, 2013 to September 11, 2013.