 Mumbai:
Prudential ICICI Asset Management Company (PIAMC)
is launching PruICICI Floating Rate Plan on 28 March 2003.
It is an open-ended debt fund, targeted at investors with
uncertain view on interest rates and who would like to
hedge their debt portfolios. Also, investors looking at
steady returns without any market volatility can look
at investing in this fund.
The
fund has two options, Cumulative and Dividend Reinvestment.
The dividend frequency has been set at a fortnightly basis,
which works out better from the tax angle, as the dividends
are tax-free in the hands of the investor.
Investors
perceiving uncertainties in the debt markets and wanting
to negate the volatilities (like the impact of the Iraq
war) can look forward to the option of parking their funds
in PruICICI Floating Rate Plan. Religious and charitable
trusts are eligible to invest in the plan under the provisions
of 11(5) (xii) of the Income Tax Act, 1961.
Floating
rate instruments, though in a nascent stage in India,
are gaining ground and the trend indicates that there
is an appetite for such products. In a floating rate instrument
the interest rate is periodically reset based on a pre-specified
benchmark rate, at pre-specified intervals.
The
reset intervals can be six months, three months, one month
and even daily depending on the duration of the floater.
The spreads will be higher for the longer-term interest
rate, allowing the investor to earn a higher carry. Floaters
can be reset to a variety of rates and benchmarks. Due
to the frequency of the reset, floaters actually behave
like money-market instruments and have a low duration.
The
initial public offering (IPO) will be open for a day,
on 28 March 2003.
Says
PIAMC managing director Shailendra Bhandari: “Floating
rate instruments have dominated world markets for years,
and are increasingly becoming important in India. Our
fund, which will invest primarily in such instruments,
will enable investors to avoid the potential capital losses,
which might otherwise have arisen if the investments were
in fixed rate instruments. While we are still positive
on our outlook for soft interests in the medium term,
this fund will enable investors to avoid losses if interest
rates start to trend upwards in the longer term.”
The
minimum application amount will be Rs1 lakh and the minimum
additional investment will be Rs 1,000. The cutoff time
for subscription is 10.30am and the cutoff time for redemption
will be 12 noon. Investors will not have to bear any entry
or exit load and the estimated recurring expenses are
pegged at a mere 0.75 per cent.
PIAMC
is investment manager to the largest private sector mutual
fund in India, the Prudential ICICI Mutual Fund. PIAMC
enjoys the strong parentage of the ICICI group, a well-known
and trusted name in financial services in India, and the
Prudential Group, one of the United Kingdom’s largest
players in the insurance and fund management business.
PIAMC
has over Rs 10,187.32 crore in assets under management
(AUM) as of 28 February 2003 and has 26 branch centres
all over India to service its over 5.5 lakh investors.
Its diverse product portfolio comprises equity, debt and
balanced funds.
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