Standard Chartered launches enterprise equity fund

To take advantage of the boom in the share market, Standard Chartered Asset Management Company has launched its 'Enterprise Equity Fund' which will invest in companies tapping the stock market for the first time.

Addressing mediapersons, Naval Bir Kumar, managing director, Standard Chartered Asset Management Company, said that there were about 200 to 250 initial public offering (IPOs) of companies which were expected to hit the market in the next two years.

The mutual fund company was targeting these stocks, he said.

Answering to a question as to why would retail investors invest in the new fund launched by Standard Chartered when they can directly invest in an IPO, he pointed out that the investor did not have to pay the 10 per cent short term capital gain on earnings which he will have to pay if he invested directly.

Moreover, while the mutual fund companies had to pay only 10 per cent margin money when investing in IPOs, a retail investor would have to pay the full application money which would be blocked for 25 days, he said.

In a year, a retail investor can invest in only 15 to 17 IPOs, while a mutual fund company can invest in 200 to 250 companies which hit the market. However, mutual fund companies can invest only in those IPOs which are open to qualified institutional bidder.

There is no entry load for any amount of the fund. However, the exit load for redemptions made within a year will be three per cent. The second year will carry two per cent and one per cent in the third year.

Standard Chartered enterprise equity fund is a three-year close-ended equity fund that aims to invest in companies coming out with initial public offering. The minimum purchase is Rs 5,000. The fund closes on May 16, 2006.