Shriram Mutual To Launch Interval Fund On June 16

Shriram Mutual Fund is set to launch the countrys first interval fund on June 16.

An interval fund is a close-ended scheme which is converted into an open-ended scheme during certain times of the year.

DA Gadgil, managing director, Shriram MF, said this was a new innovation in the domestic mutual fund industry. The concept was introduced by the new Securities and Exchange Board of India (Sebi) regulations for mutual fund industry. The scheme has been designed as a close-ended scheme for a 10-year tenure and the unitholders of the scheme will not be charged with any front-end load, Gadgil said.

 

The scheme will be open once in six months for a week and during this period, repurchase as well as fresh issue of units will be carried out. There is a distinction between an interval fund and a normal close-ended mutual sche-me in terms of fresh issue of units.

While close-ended schemes have been recently allowed to issue fresh units, the unit capital of such schemes has to remain constant. In other words, the fresh issue of units can be done only to the extent of repurchase the scheme had earlier faced.

The unitholders of this scheme will have taxation benefits under 54EA and 54 EB of income tax regulations, Gadgil added. The scheme will be investing primarily in equity instruments. While investments in highly liquid A group stocks will be to the extent of 40 per cent, exposure in B1 counters will be to the extent of 20 per cent.

The scheme is likely to invest about 10 per cent of the corpus in primary market issues which are at an excess of Rs 25 crore.

Fund managers to the scheme will have the flexibility to decide instruments for 10 per cent of the corpus.

The balance of the corpus will be invested in debt and money market instruments.