The Hindu Business Line : Kotak MF scheme with exposure to US T-Bills

KOTAK Mahindra Mutual Fund plans to launch a new close-ended scheme — K US Treasury — that will provide Indian investors an opportunity to invest in US Treasury Securities.

The total corpus of this scheme, which is being sponsored by Kotak Mahindra Finance Ltd, is expected to be around Rs 70 crore.

Kotak Mahindra Mutual Fund is the second fund to offer a scheme with an option to invest in foreign debt. Recently, Sun F&C Mutual Fund had launched an open-ended Fixed Income scheme with a similar option.

The objective of the K US Treasury is to invest in the US treasury with outstanding maturities of up to five years from the date of allotment of the initial offer.

"The rationale behind investing only in the US Government securities is that we wanted to give Indian investors the best credit and strong currency. And, the US currency is the safest," said Mr Prakash Dalal, Chief Marketing Officer, Kotak Mahindra Mutual Fund.

"The fund will have a total corpus of Rs 68 crore," Mr Dalal said. The initial offer price (IPO) of the scheme is Rs 10 per unit with a minimum investment of Rs 1,00,000.

The AMC has already filed a draft offer document with the Securities and Exchange Board of India (SEBI). As far as launching the scheme is concerned, Mr Dalal said, "we are currently watching the market and monitoring the rupee-dollar parity which is important for this scheme. The launch of the scheme depends on stabilisation in the parity."

Some sections of the industry have voiced their apprehensions regarding the various limitations attached to such a scheme.

However, Mr Dalal said, "this is the first time Indian investors will be investing in foreign paper. Hence for a

first-time exposure, the AAA rating makes sense. Even in India, where fund managers know the market and companies well, most prefer AAA-rated paper. Going to a relatively unknown market where you don't always know what variables are at play, it is prudent to have such a rating limitation. As for the investment cap, what is allowed now is not a small amount."

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