Thread Needle Debt Fund To Indicate Returns
ITC Threadneedle yesterday announced plans to indicate returns in its forthcoming debt fund.
The fund, to be launched by March 31, 1997, is set to become the first one to indicate returns following the Sebi decision in this regard.
Also, the asset management company (AMC) has firmed up plans to set up the countrys first sectoral fundinfrastructure would be its chosen area of investments.
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Senior officials of the asset management company told Business Standard that the debt fund would be targeted at the corporate as well as the retail clientele and would be specifically marketed to the corporates.
Besides an assured return of 15 per cent, the scheme plans to give indicative returns for a period of one year, said Sanjay Jha, vice-president of ITC Threadneedle. FIIs will also be targeted as clients for this scheme.
The fund would invest in bonds with AA ratings and corporate debentures with ratings of triple A, Jha added.
To meet the redemption requirements, money market investments will be also made out of this 100 per cent debt fund.
The AMC top brass is still contemplating on whether to launch the scheme as a close-ended one with a lock-in period of one year or as a plain open-ended scheme.
Explained Jha: The scheme could be launched as a close-ended one for a one-year period and could then be converted into an open-ended one.
This would be ideal for corporates which would park their funds for one year to get the benefits by way of long-term capital gains tax and indexation.
Besides, the scheme could be also launched as an open-ended fund with no front-end load charged to the investors. ITC Threadneedles first schemeTop 200 (with a current net asset value of Rs 10.05)was also launched as a no-load scheme.
Since the AMC already has an equity scheme in place, a debt fund would be an alternative investment option for investors. Also, the current interest rates gives the fund manager to invest in some attractive long-term instruments, Jha said.
ITC Threadneedle is also exploring the possibility of allowing switch-over between schemesequity and debt.
Apart from the debt fund, the company has lined up two other schemes for this year.
We are looking at launching a close-ended sectoral fund, the first of its kind in the country, and a money market mutual fund, Jha said. The sectoral fund will invest in infrastructure projects involving construction, power, transport and telecom sectors.
Investments will be also made in green field projects and the AMC may enter into bought-out delas. Currently, the countrys infrastructure is primarily funded through debt, and the AMC will be looking into investing in equity components of some of the better projects, Jha added.
The evaluation of stocks is under way and the scheme will be marketed among corporates, NRIs, institutions (both domestic and foreign), and large net worth investors. The AMC will be pre-selling the scheme to its target investors in a way similar to book-building, Jha disclosed.
The scheme is slated to be launched in between June-September and a minimum target amount of Rs 20 crore has been fixed.