Kotak Mahindra To Unveil Gilt Fund

Kotak Mahindra Mutual Fund is planning to launch operations in mid-September by tapping the market through two schemes. The fund hopes to collect a minimum of Rs 100 crore in each scheme. One scheme will be the first 100 per cent gilts fund to be launched for retail investors. The fund, which will invest its entire corpus in government securities, will be open ended.

The other scheme will be a pure growth equity scheme which will invest in a basket of 30 securities to be chosen by the Kotak Mahindra Asset Management Company. Explaining the rationale of the open ended gilts fund, Sekhar Sathe, managing director, Kotak Mahindra AMC, said: "Till now, there has been no vehicle for retail investors to invest in the government securities market. Besides, given the current market and economic conditions, one of the key things a fund manager has to be aware of is the liquidity of his assets. A pure government securities fund will be much more liquid vis-a-vis corporate debt," says Sathe.

 

Sathe hopes to be able to convince investors that gilt funds can be as liquid and provide comparable, if not better, returns than term deposits with banks.

"There can be nothing safer than gilts because the government cannot default. The investors, therefore, only run a price risk," he added. Sathe said he hopes to leverage the group's retail client base to garner the fund's corpus. "The Kotak Mahindra group has over 2,00,000 retail clients who all can be tapped for the mutual fund schemes," says Sathe. Kotak Mahindra AMC is likely to submit its offer documents to the Securities and Exchange Board of India soon.