Kotak Mahindra Mutual To Unwrap K-Gilt On Dec 11

Kotak Mahindra Mutual Fund will launch the country's first retail gilt fund on December 11. Dubbed K-Gilt, the scheme is an open-ended debt fund which will invest its entire corpus in government securities only. It also plans to launch an open-ended equity growth scheme called K-30 simultaneously.

"In the minds of the investors, safety and security of their investment is more important than returns at a time when there is a overall deterioration of credit risk. And there is nothing safer than sovereign paper," said Uday S Kotak, chairman Kotak Mahindra Asset Management Company.

The minimum subscription amount will be Rs 10000 for both K-Gilt and K 30. The K-Gilt scheme will have two investment options, which are designed to bring the 100 per cent safety of government securities within reach of the small investors, said Shekhar Sathe, chief executive officer of the Kotak Mahindra AMC.

 

The K-Gilt saving's plan will cater to investors who are looking for investment avenues for balances in their savings and current accounts. Under this plan 70 per cent of the corpus will be invested in securities with less than one year to maturity and the remaining 30 per cent will be invested in government securities with a maturity of more than one year.

The investment plan is designed for investors seeking the highest safety of government securities and the benefits of indexation on long-term capital gains.

Under this plan 70 per cent will be invested in securities with a maturity of over a year and the rest with maturity of less than one year.

The equity scheme, K 30, will invest only in 30 stocks at a time.

"We do not believe that more stocks in the portfolio can lead to risk diversification. We will focus on high growth stocks. The portfolio will be churned regularly but the number will remain the same," Sathe added.

He also stated that the 30 scrips in the portfolio need not to be a part of the BSE Sensex or Nifty. "We will decide on companies on the basis of the intrinsic value and the quality of management," he said.

The initial subscription period for both schemes is December 11 to December 21, 1998.