SBI Mutual Fund plan for children

Mumbai: Keeping in mind the future requirements of your child, SBI Mutual Fund has introduced the Magnum Childrens Benefit Plan, an open-ended scheme that will be available for sale and repurchase throughout the year.

The scheme will endeavour to provide a long-term capital appreciation to Magnum-holders through an actively-managed portfolio of equity, debt, government securities and money market instruments.

The scheme will follow the investment principle of 80:20, whereby over 80 per cent of the funds will be invested in debt-oriented instruments and the remaining in equities a factor that gives the scheme a low-risk status. And if the bourses performance improves, the scheme may increase the equity component up to 25 per cent.

Commenting on the scheme, SBI Mutual Fund MD Niamatullah says: "Since SBI Mutual Fund as a brand is very strong in the mutual fund market, we have decided to launch a dedicated plan for the benefit of children. This would provide an opportunity to investors to secure the future of their children through the scheme."

The highlights of the scheme:

1. Units will be available at par (Rs 10) during the initial offer period and at NAV-related prices when the scheme goes open-ended.

2. The initial offer is open from 28 December 2001 till 25 January 2002, and will reopen for resale and repurchase from 20 February 2002.

3. Parents, guardians, relatives, institutions and NRIs can invest on behalf of a child. The child should be above three months and below 15 years of age as on the date of investment.

4. The minimum amount of investment is Rs 1,500 and in multiples of Rs 100. There is no maximum limit.

5. The scheme provides a systematic investment facility under which periodic investments can be made. This facility is open only at investor service centres and after the scheme goes open-ended.

6. The scheme will provide a personal accident insurance cover to either of the parents or the Magnum-holder (only resident Indians) against accidental deaths or permanent total disability relating to these accidents up to a limit of ten times the investment or a maximum of Rs 3 lakh. In addition to this, on the unfortunate event of death of either parent, the child will stand to receive an additional 10 per cent of the claim amount towards educational expenses. The cost of providing the insurance cover would be borne by the AMC.

7. Tax benefits available to the unit-holders will be as per the prevailing laws. Thus:

i. Tax benefits are available under sections 48 and 112 on capital gains for resident Indians. The Magnum-holders will have the option to pay long-term capital gains tax @ 10 per cent (plus applicable surcharge) without the cost inflation index benefit, or @ 20 per cent (plus applicable surcharge) with the cost inflation index benefit, whichever is more beneficial.

ii. Magnums held under this scheme will not be liable to wealth tax and gift tax. Tax exemptions will strictly be governed by the relating provisions and the relevant tax laws.

SBI Mutual Fund at a glance

Background
In 1987, sensing the need for an investment alternative, the State Bank of India launched SBI Mutual Fund, making it the pioneer bank sponsoring mutual fund in an untapped field with a huge potential.

Providing a vehicle for investors
The basic objective of any mutual fund is to provide a vehicle for investors to avail of the benefits of investment in the capital market and the money market. SBI Mutual Fund aims to provide such benefits even to the smallest investor in urban as well as rural areas, and offer an opening to employ their funds effectively.

Establishment
SBI Mutual Fund has grown tremendously in terms of corpus as well as in the number of investors. Today, it is the largest bank-sponsored mutual fund with an investor-base of 1.1 million. SBI Mutual Fund has launched 32 schemes, of which 12 have been redeemed, yielding handsome returns. At present, the fund manages over Rs 3,200 crore. SBI Mutual Fund is also the first bank-sponsored mutual fund to launch an offshore fund, the India Magnum Fund, with a corpus of $51 million. With the largest service network (26 investor service centres and three investor-service desks), SBI Mutual Fund constantly endeavours to get closer to its growing family of investors.

Pedigree
SBI Mutual Fund draws strength from Indias premier and largest bank, SBI. Set up on 1 July 1955, SBI is the largest banking operation in the country. Through years of commitment to service and national development, SBI has grown into an instrument of social change. Presently, it has 9,026 branches in India (excluding over 3,850 branches of banking subsidiaries) and 52 offices in 31 countries spread over all time zones.