Tata Mutual Fund Launches ‘Tata Equity Management Fund’

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Tata Mutual Fund announced the launch of a unique new mutual fund scheme, the Tata Equity Management Fund, initially an 18-month close-ended equity scheme with a weekly exit option to investors during the close-ended period. Upon completion of 18 months, the scheme will automatically be converted into an open-ended scheme. This is the first time such a product is being launched in India.

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Tata Mutual Fund announced the launch of a unique new mutual fund scheme, the Tata Equity Management Fund. The Tata Equity Management Fund is initially an 18-month close-ended equity scheme with a weekly exit option to investors during the close-ended period. Upon completion of 18 months, the scheme will automatically be converted into an open-ended scheme. This is the first time such a product is being launched in India.

Tata Equity Management Fund seeks to understand the volatile nature of markets and generate capital appreciation and long-term growth opportunities by investing in equity and equity related instruments, combined with a derivatives option that aims to manage the downside risk while aiming to maximize long term returns.

Speaking on the occasion, Mr. Ved Prakash Chaturvedi, Managing Director, Tata Asset Management Ltd, said, “On the one hand, the economic fundamentals look good from a long term view - given a high GDP growth, higher level of expenditure into infrastructure, increased global business for BPO sector and new opportunities in pharmaceutical and IT industries. However, in a current sustained bullish market, relative valuations have gone up significantly and investors are now worried about the optimization of returns while investing. Tata Equity Management Fund presents a strategy to minimize risk and maximize return in such potentially volatile markets.”

Tata Equity Management Fund will invest across market capitalizations in a diversified portfolio of carefully selected stocks. The fund will aim to moderate downside risk to the portfolio through hedging the portfolio using stock or index derivatives. Besides the fund would also capitalize on both short term and long-term opportunities through a stock specific or index oriented shorting strategy to enhance returns. The extent of hedging of the portfolio is determined based on the month end weighted average PE ratio of the S&P CNX Nifty and also depending upon the Fund Manager’s perception of the markets. The Index Derivatives will be used mainly for the purpose of hedging. However the Fund Manager may if the opportunity exists, use stock specific derivatives to earn profits.

The new fund offer for Tata Equity Management Fund will be open from May 15, 2006 to June 9, 2006. The scheme will reopen for repurchase not later than July 7, 2006.

Tata Equity Management Fund Key Features:

  •     18 months close-ended equity scheme. During this period, a weekly Exit option is available to investors during close-ended period. Upon completion of 18 months, the Scheme will automatically be converted into an open-ended scheme, without any further reference from the Mutual Fund/Trustee. Units outstanding under the scheme on the completion of 18 months will automatically continue under the open-ended scheme, without requiring any further reference from the unit holder.
  •     Investment Details (Options) : Dividend (Payout / Reinvestment) and Growth options
  •     Minimum Application: Rs. 5,000/- and thereafter in multiples of Re. 1/-.
  •     Repurchase facility: Once a week during close-ended period and on all business days subsequent to the scheme’s conversion into an open-ended scheme. On going sales on all business days subsequent to the scheme conversion into an open-ended scheme.
  •     Applicable Load Structure for applications received during NFO period - Entry Load: Nil; Exit Load: Nil*.

*Subject to recovery of proportionate New Fund Offer Expenses

  •     Sale at Rs. 10/- per unit for cash at face value during the NFO and after conversion into an open-ended scheme at NAV based price with applicable loads.
  •     Investment Objective: The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related instruments and the secondary objective is to generate consistent returns by investing in debt and money market securities.
  •     Investment Pattern: Equity: Minimum 65% of Funds Available / Net Assets. Maximum of 100% of Funds Available / Net Assets. Debt: Up to 35% of Funds Available / Net Assets. New fund offer (NFO) expenses up to a maximum 6% of the amount mobilized will be charged to the scheme and shall be amortised over a close-ended period. In case of redemption before expiry of close-ended period, proportionate unamortised NFO expenses will be recovered from the redemption proceeds of the investors.
  •     There is no assurance of returns under the scheme.

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Tata Mutual Fund

Statutory Details:

Constitution: Tata Mutual Fund has been set up as a trust under the Indian Trust Act, 1882. Investment Manager: TATA ASSET MANAGEMENT LTD. Trustee: TATA TRUSTEE COMPANY PVT. LTD. Sponsors and Settlors: Tata Sons Ltd., Tata Investment Corporation Ltd. Risk Factors: All investments in Mutual Fund and securities are subject to market risks and there can be no assurance and no guarantee that the Scheme will achieve its objective. As with any investment in stocks, shares and securities, the NAV of the Units issued under the scheme may go up or down depending upon the factors and forces affecting the capital market. Past performance of the previous schemes, the sponsors or its group affiliates are not indicative of and do not guarantee the future performance of the previous schemes. The above mentioned scheme is only the name of the scheme and do not in any manner indicate either the quality of the schemes, future prospects or the returns. The sponsors are not responsible or liable for any loss resulting from the operations of the scheme beyond the initial contribution of Rs. 1 lac made by them towards setting up the Mutual Fund. For scheme specific risk factors and other details please read the offer document carefully before investing. For offer documents and application forms, please contact your nearest Collection centers / AMC Offices.

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