Three Tata Mutual Schemes Get Nod

Tata Mutual Fund has obtained the approval of trustees and the Securities and Exchange Board of India (Sebi) to introduce three schemes, Tata Bond Fund, Tata Tax Saving Fund '97 and Tata Retirement Pension Fund.

Tata Tax Saving Fund '97 is expected to be launched in October or November 1996. Interestingly, the fund proposes to pay 'compensation' for advance contribution by way of interest earned on investor's funds.

This compensation may be based on 15 per cent earnings subject to approval of Sebi. Though incentives are not permitted by the regulator, 'compensation' payment to investors in other bond issues are allowed. The minimum target for the fund is Rs 15 crore.

 

Tata Bond Fund will be a 'high return' income scheme with an assured return in the first year giving both a regular income as well as cumulative option. The scheme offers redemption after one year at net asset value-based price.

The idea is to convert as an 'open-ended fund' after one year subject to Sebi's approval. The minimum target is Rs 20 crore. The minimum assured income will be at the rate of 15 per cent half-yearly payable after six months up to March.

This will give an effective yield of 16.10 per cent annually. It is targeted at those investors who are looking for a regular income along with possible capital appreciation.

The fund would target 90-95 per cent investment in rated debentures/bonds at a current yield of 18-19 per cent. This pattern can enable the fund to pay higher return in the subsequent years.

According to K N Atmaramani, the best advantage of the scheme would be that of tax under which the amount on redemption will attract only capital gains tax as against investments under fixed deposits and deep discount bonds of the corporate sector where, on redemption, a pre-determined interest income for such period as accumulated will be treated as 'income' and therefore attracts a higher income-tax.

The Tata Retirement Pension Fund will be an open-ended fund targeted at retirees.

It has two options "" regular income and triple regular income. The scheme has been filed with the Central Bureau of Direct Taxes (CBDT) for approval. Monthly pension will be paid for life on the completion of 60 years of age with the scheme having an option to commute full or part of the accumulated amount as per the investors wishes.

Till the investor keeps the entire accumulated amount invested in the fund, he or his assignees can continue to get his pension life long.