SBI Mutual Fund brings forward reopening date

The SBI Mutual Fund, which recently tapped the capital market with an open-ended debt fund called the Magnum Monthly Income Fund, has decided to reopen the scheme for regular sale/repurchase on a continuous basis from 4 April 2001.

The scheme was initially structured to reopen on 23 April but now the re-opening date has been brought forward to 4 April 2001 in order to tap opportunities arising out of VRS market. The scheme had recently opened for subscription on 22 February 2001 and had closed on 23 March 2001. The objective of the scheme is to tap funds from scores of employees who are currently flushed with funds having taken voluntary retirement from their employment and are looking for opportunities to deploy their funds.

Speaking to domain-b, the SBI Mutual Fund spokesperson said, "We have been advised that most of the VRS money will be paid out in the first week of April. We therefore decided to bring forward the reopening date to provide full opportunity to investors."

The fund also did not want initial subscribers to wait too long for NAVs etc to be declared, which is another reason for the reopening date having been brought forward. The scheme is however not limited to VRS segment but is in fact open to all investors. "It is purely a matter of timing", said the spokesperson. With so much of VRS money in the market, it was but natural for the fund to tap this opportunity, the spokesperson explained. The fund has not set any targets for itself as far as mobilization amount is concerned.

While declining to give any figures on the amount collected the spokesperson is confident that investors will bite and the final amount collected will be significant. Giving reasons he said, "We have a track record of giving excellent returns to investors. Moreover VRS guys will be looking for safety of their investment coupled with recurring and regular income. Our scheme provides both."

The fund has been interacting with specific market intermediaries like brokers for tapping the right sources and individuals. As per estimates, about Rs 12,000 crore is expected to come into the VRS market, assuming that 1.5 lakh bank employees will ultimately opt for VRS and each will get approximately Rs 8 Lakh in cash as retirement package.

The objective of the scheme is to provide investors regular income coupled with liquidity by investing the corpus into a portfolio comprising debt, equity and money market instruments.

The scheme offers choice of two investment plans

• dividend plan under which investors will receive regular income through monthly, quarterly or annual dividend distribution with an option to reinvest dividend distributed, and

• growth plan under which investors will receive long - term capital gain benefits sans dividend.

Highlighting the investment policy Mr Niamatullah, managing director, SBI Funds Management told domain-b that not more than 15 per cent of the corpus will be invested in equity and related instruments and not less than 85 per cent of the corpus will go into debt instruments including government securities and money market instruments.

He said not more than 10 per cent of investments in debt instruments will be parked in securitised debt. It is the fund’s policy to limit its exposure to IT stocks to 35 per cent, media stocks 25 per cent and telecom stocks 25 per cent. Overall exposure to the above three sectors is limited to 60 per cent. Industry wise exposure to other sectors is limited to 15 per cent.

SBI Mutual Fund’s total corpus stood at Rs 3,200 crore as on 19 March 2001 and it is looking towards at least doubling it by the end of fiscal 2002. The fund is planning to come out with many similar as well as equity based schemes in future for the benefit of investors.