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JM Mutual plans gilt fund series

Our Bureau

KOLKATA, April 30

JM MUTUAL Fund has proposed to introduce a string of gilt funds with maturities ending between December 31, 2005 and December 31, 2015.

Named JM G-Sec Marathon Series, this would involve eleven plans, each with dividend and growth options. To be identified by a separate number, every plan would have a portfolio of securities normally maturing in line with the time profile of the plan.

According to Mr Krishnamurthy Vijayan, Chief Executive Officer of JM MF, the gilt fund series has been devised keeping in view the needs of discerning investors, particularly corporates.

The Marathon Series, with Rs 5 lakh as the minimum investment, has been devised to enable investors to get regular returns. The focus is on current income with sovereign credit quality.

Serial plans, given their characteristic advantages, are gaining popularity in the country, Mr Vijayan observed. JM MF plans to use these as a tool to attract large investors who see merit in investing in gilt-oriented products.

A gilt scheme invests in sovereign securities, protecting the investor from credit risks. Additionally, a serial plan allows him or her to select and lock into a fixed maturity. Holding such an investment up to the maturity of the plan mitigates interest rate risks. Consequentially, serial plans appeal to those who have in mind a time-frame for investment (measuring up to the maturity of the chosen plans).

In the past, serial plans (in both gilt and bond fund categories) had been introduced by the likes of Kotak Mahindra MF. The latter, for instance, has a gilt plan for 2013.

JM MF, which has already filed the offer document with the Securities and Exchange Board of India for clearance, would launch the Marathon Series as soon as it gets the regulator's approval. It would be launched with no entry load in the initial stages. There would, however, be an exit load of one per cent if an investor decides to pull out before the specified date of redemption.