The Hindu Business Line : Birla Mutual proposes to launch NRI Fund

The proposed Birla NRI Fund will try to provide a balance of income and growth by investing chiefly in debt instruments, while a small portion will be allocated to equities. Its NAV will be announced every week.

The fund will provide for liquidity on a monthly basis, the offer document filed with SEBI has mentioned. Redemption requests received during a month will be processed on the last date of that month.

Birla NRI Fund, which will require a minimum investment of Rs 25,000, will have Crisil MIP Blended Index as its benchmark. Debt securities and money market instruments may account for 75-85 per cent of the assets, while equity and equity-related instruments may take up 15-25 per cent. A maximum 25 per cent may be invested in derivatives. Investments in securitised debt may be made up to 50 per cent of the assets.

The fund manager will aim at generating "risk-adjusted returns on a consistent basis", it is pointed out. The plan is to allocate assets in high quality debt, while the stock selection is expected to drive capital growth. The 75-85 per cent debt exposure will be gradually scaled up to 100 per cent over the three-year period.

Redemptions made on the maturity date will not attract any exit load. However, redemptions made during stipulated repurchase periods/dates will attract an exit load on the basis of the length of investment.

For instance, if repurchased within 12 months, a 4 per cent load will be charged.

Little resemblance with other schemes:

Birla MF's latest proposal is by far different from funds carrying the NRI tag, two of the latter being Magnum NRI Investment Fund and Reliance NRI Equity.

The SBI MF product provides three debt-oriented options, called Short-term Bond, Long-term Bond and FlexiAsset.

Each of the first two has a clear-cut rationale, appealing to investors with different investment horizons. The third, FlexiAsset, follows an asset allocation model that allows the fund manager to invest even in equities, specifically those drawn from the BSE-100 index.

Reliance NRI Equity on the other hand is wholly equity-oriented, with the BSE-200 as its benchmark. Launched in 2004, it has provided about 49 per cent on a one-year basis (as on November 30).

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