A Close Ended Capital Protection Oriented scheme
Birla Sun Life Mutual Fund has filed an offer document with Securities
and Exchange Board of India (SEBI) to launch Birla Sun Life Capital
Protection Oriented Fund - Series 3, a close ended capital protection
oriented scheme. The new fund offer (NFO) price for the scheme is Rs.10
per unit.
The investment objective of the scheme is to seek to provide capital
appreciation linked to equity market with downside protection at the
end of tenure. Equity upside to come from investment in equity exchange
traded options, and downside protection to come from investment in debt
market securities with tenure comparable to the tenure of the Plan. The
option premium will be equal to the estimated interest income, after
expenses, at which the securities are invested. The scheme will have
duration of 18 to 36 months from the date of allotment.
The scheme shall have Growth Option only.
The scheme will invest 80-100% of its net assets in debt
securities and money market instruments (Money Market Instruments
include commercial papers, commercial bills, treasury bills, and
Government securities having an unexpired maturity upto one year, call
or notice money, certificate of deposit, usance bills, CBLOs and any
other like instruments as specified by the Reserve Bank of India from
time to time). The scheme may also invest 0-20% in options premium.
The Option Premium shall be for the purpose of exposure to derivative
instruments which shall be restricted to long call options. The Options
Premium offers the actual equity market exposure, the notional value of
such exposure shall be within the limits specified by SEBI from time to
time. As per current provisions of SEBI, the long positions in index
derivatives (long futures, long calls and short puts) shall not exceed
(in notional value) the Mutual Fund's holding of cash, government
securities, T-Bills and similar instruments Moreover, the upper limit
of 20% investment in Options Premium is applicable only at the time of
investment. If due to market action the value of options appreciates/
depreciates resulting in breach of the limit of 20%, the fund manager
may or may not rebalance the portfolio and may run with the ongoing
exposure. However, if the fund manager sells the option before
maturity, the reinvestment will be subject to maximum 20% limit on
Options Premium.
The minimum subscription amount is Rs 5,000/- and in multiples of Re 10/- there after.
The fund seeks to collect a minimum subscription amount of Rs. 10,00,00,000/-.
The scheme will be benchmarked against Crisil Balanced Fund Index.
The fund manager for the scheme: Satyabrata Mohanty.