Sucheta Dalal :Birla MF targets FD holders through its capital protection fund
Sucheta Dalal

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Birla MF targets FD holders through its capital protection fund  

March 4, 2010

Mutual funds (MFs) eye fondly lakhs of crores lying in savings accounts and term deposits of banks but have never found a way to get even a tiny fraction of this money.
Birla Sun Life MF is making one more attempt with its capital protection scheme. It has recently sent a text message to some Independent Financial Advisors (IFAs) saying: "NRE Deposits earn 3.5% interest v/s Birla Sun Life Capital Protection offering deposits plus returns. This category is a very big target segment for this fund. Please speak to all your deposit holders as this product offers safety and returns which will attract every investor class."

The message was in connection with the fund house’s new fund offer (NFO), ‘Birla Sun Life Capital Protection Oriented Fund Series I’. The company has denied sending any such message on its part. According to trade sources and competitors, Birla Sun Life is targeting to mop up Rs600-Rs700 crore from this NFO.

The fund allocation is about 90% in bonds and 10% in equity. The fund aims to expand the investment by the end of 27 months. “It has a clear objective to protect capital because many people are hesitant to enter such products because their capital is at risk. It is difficult to commit a target for the NFO at this time,” said A Balasubramanian, chief executive, Birla Sun Life Mutual Fund.

“It is targeted towards fixed deposit investors who are keeping their money in fixed income where they earn 3%-4% interest,” said Mr Balasubramanian.

The fund is rated ‘AAA’ by Credit Rating Information Services of India Ltd (CRISIL). No TDS is applicable except for NRIs. The fund aims to further reduce tax liability by triple indexation method. The NFO closes on 10th March.
— Ravi Samalad

-- Sucheta Dalal