Kotak Mutual Fund launches medium term fund

Kotak Mutual Fund has launched an open-ended debt scheme – Kotak Medium Term Fund. The fund offer opens for subscription from February 28 and closes on March 13, 2014.

The fund aims to generate returns by investing in a portfolio of medium term debt and money market instruments and by keeping the portfolio's weighted average maturity between three and seven years.

“Kotak Medium Term Fund is suitable for conservative investors who seek regular income over a medium term horizon and want to benefit from potential easing of inflation over medium to long term. This scheme aims to achieve better tax efficiency than conventional deposits,” said the fund house in a news release.

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The mutual fund scheme will focus on the accrual approach and invest in debt and money market instruments at the current high yields to accumulate the yields in the portfolio. In addition to high accrual, the portfolio will have the potential to benefit from capital gains if interest rates ease in the future, said the statement from the fund house.

The minimum investment amount for the fund during the new fund offer period is Rs. 5,000 per investor. The scheme has growth option, quarterly dividend and annual dividend. The fund will be managed by Lakshmi Iyer, chief investment officer (debt) and head of products.

Earlier this month, Deutsche Mutual Fund also had launched their open-ended medium term fund - DWS Medium Term Income Fund. The benchmark for both the funds is the CRISIL Composite Bond Fund Index.