Idbi Money Mutual Nav At Rs 10.13

The IDBI Mutual Fund has announced its net asset value per unit for the money market mutual fund scheme for the first time. It has been pegged at Rs 10.13 which translates into a return of a whopping 16.68 per cent, the highest offered by any other MMMF scheme. The scheme turns open-ended from July 15 and will announce NAV on every working day.

Besides IDBI MF, UTI and Kothari Pioneer have launched money market mutual fund schemes. While according to UTI sources, the MMMF return is hovering around 9 per cent, market sources, say that the return offered by Kothari Pioneer is pegged between 10-11 per cent.

IDBI Mutual Fund launched the scheme on June 9 and collected around Rs 10 cr in the initial offer period. Senior IDBI MF officials feel that the return will set a precedent for all other funds who would line up such schemes. A K Basu, chief executive of IDBI MF told Business Standard that they have raised the expectation levels of the investor. "The return that we have offered on our scheme comes as a surprise to us. However, this will establish the fact that the scheme is attractive even for individual investors," he said.

Market observers say that it may not be easy for the fund to sustain the return for a long time. IDBI MF officials also admit that it may not be easy for the fund to sustain the return of around 16 per cent. "We expect the return to hover around 13-14 per cent per annum in future as competition increases," says S Chandrashekhar who looks into the money market operations of IDBI MF.

He feels that sustainability of this return depends on the market conditions remaining favourable. "We entered at a time when market conditions were favourable to us. We have invested in instruments like government securities, certificate of deposits of banks and inter-bank call money rates. The selection of scrips and skill of traders is crucial as securities in which MMMF can invest are limited," he added.

The fund has also drawn up an aggressive marketing strategy following the return generated in the scheme. Basu said that the retail investor will be the focus of their strategy. "We expect to educate the investor on the nature of the money market mutual fund scheme and highlight the security aspect of the instrument."

IDBI is planning to introduce a voice recording system wherein the existing unitholder or prospective investors can access information about the scheme over the telephone.