Birla Bond Index Fund, managed by Birla Sun Life Mutual Fund, the IPO of which opened on April 22, has been getting a good response from the corporate and retail investors alike, said Birla Sun senior fund manager K Ramanathan here today.
Declining to quantify the investments the fund had been raising, he said retail investors had for the first time in the country been presented with an income fund with high safety and liquidity features. Besides, the lowest expense ratio at 0.75 as against 1 to 1.5 per cent for other funds was being taken note of by them, he said.
Ramanathan explained the rationale of the fund was to provide a portfolio which was representative of the debt market, attempting to afford both average and reasonable returns.
With effective diversification and risk control mechanisms, it should be seen as complementary to the actively managed fund and not a competition, Ramanathan elaborated.
Ramesh Kabra, the Hyderabad branch head of Birla Sun Life, explained the salient features of the index fund. The first index fund in the country to track the debt market, it tracks Crisil composite bond index which in turn tracks the returns on a composite debt portfolio of call instruments, commercial papers, government securities, AAA and AA rated instruments.
The Crisil Bond Fund Index aims at providing returns comparable to those from diversification of investments in more than one debt fund.
With a T+1 redemption, Birla Index Fund also offers high liquidity.
The minimum investment in the IPO is Rs 25,000. There is no entry load. Exit load will be charged for investments less than Rs 10 lakh at 0.25 per cent, if redeemed within 90 days. The issue closes on May 2.