Idbi Mutuals Designer Deposit Scheme On Cards

The IDBI Mutual Fund has firmed up plans to launch the countrys first-ever `designer and recurring deposit schemes. The plan forms a part of the package of launching four schemes the other two being a money market fund and a pension fund.

The AMC has just received the Securities and Exchange Board of India (Sebi) approval for launching these four schemes.

The `designer scheme has been structured in a novel way as this has 100 per cent flexibility as far as investments are concerned. Each investors can choose his or her own avenue of investments, be it stocks or debt or both. The portfolio would be tailor-made for each individual investor, disclosed sources.

 

There, of course, will be a one-year time schedule during which an investor cannot switch his avenue of investments he added. The scheme, targeted at urban and semi-urban investor groups, is likely to have a minimum investment limit of Rs 5,000.

The fund manager and the investors will be involved in the scheme from the very beginning. This will help investors to understand mutual funds as investment avenues better, sources pointed out.

The scheme has been initially designed as per the interval fund concept (close-ended schemes which open for repurchase and sales during certain times in a year), however, the scheme could be also closed after a 15-year period.

The recurring deposit scheme marks the foray of mutual funds into this sector. Designed as a child benefit scheme, investments will have to be made over a period of seven or ten or fifteen years after which the beneficiary (a non-minor) can get the redemption amount.

This scheme would be debt oriented and an annualised return of 14.5 to 15 per cent is expected at redemption. Besides, there will be an insurance cover attached to the product.

Explaining the structure of the pension scheme, a senior AMC official said the scheme will be structured in four different categories. Investors subscribing to the scheme will have the option for investing for periods of 7, 14, 21 and 30 years.

We are targeting investors beyond the age-group of 25 years. Investors, once they retire, will be getting a fixed percentage as interest in every month for a specific period ranging between 15 and 20 years. After this period, the investors will be asked to take away their deposits, the official explained. The investments of this scheme will be primarily in debt as these instruments provide regular returns. Like the `designer scheme, the pension fund would also be structured like an interval fund.