NEW DELHI: Trust Asset Management Company on Tuesday introduced the launch of an open-ended liquid fund, which is able to largely put money into debt and cash market devices. The fund home goals to boost Rs1,000-2,000 crore by means of the brand new fund supply (NFO), which might be open for subscription throughout 8-22 April.
This is the second such supply from Trust MF, having launched its maiden NFO of banking and PSU debt fund in January, which acquired a gap asset beneath administration of Rs580.24 crore.
The fund might be managed by Anand Nevatia, fund supervisor, Trust Mutual Fund.
“We might be making a portfolio with weights primarily based on excellent issuance quantities, consisting of highest rated issuers with excessive liquidity. Our liquidity might be excessive as portfolio liquidity will depend on credit score high quality and liquidity of its investments and never on the dimensions of the portfolio,” mentioned Nevatia.
The expense ratio the fund is 10 foundation factors for the direct plan and 25 bps for the common plan.
According to the fund home, it should deal with long-term score of the corporate as an alternative of the short-term score. Investment advisers typically counsel liquid funds for brief durations.
“A typical false impression is to equate short-term A1+ score to the long-term score of AAA. In actuality, an issuer with decrease long-term score might be given an A1+ score for short-term devices. The highest short-term score doesn’t essentially translate into the best long-term score,” the corporate mentioned within the product presentation.
Over the previous yr, liquid funds have delivered a mean return of three.5%.
In a mannequin portfolio, the fund home can have a most of 15% allocation to business papers of PSUs, 35% to papers of personal corporations and 20% to certificates of deposits.
“When it involves liquid funds, it’s higher to go along with a fund, which predominately invests in public sector items, and the personal credit score is on the decrease aspect. A key constructive of this fund is that it’s giving extra significance to long-term scores. For liquid funds, retail buyers ought to have a look at the standard of the portfolio and never the return column as a precedence ought to be security,” mentioned Harshad Chetanwala, a Sebi-registered funding adviser and co-founder of MyWealthGrowth.
Investors ought to observe that positive aspects from debt funds held for lower than three years are added to the general revenue and taxed on the revenue tax slab price.
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