Sundaram Newton's initiative to popularise Money Fund

By S. Varadharajan

CHENNAI, OCT. 14. Liquid funds have turned out to be the preferred investment avenue for investors in mutual funds. The inflows in to these funds are substantially going up. Many mutual funds have come out with a range of liquid funds. The objective of these funds is to provide a level of income consistent with preservation of capital. This is achieved through investing in short-term fixed income securities. Sundaram Mutual Fund has one such fund called `Sundaram Money Fund'.

Mr. T. P. Raman, Managing Director, Sundaram Newton Asset Management Company (SNAMC), which is managing the fund, told this correspondent that the fund, launched in April 2000, had a corpus of more than Rs. 90 crores at present and the plan was to reach the Rs. 200 crore mark in a short time.

He said ``Liquid funds are a good option for parking short-term surpluses given that these funds have very short portfolio maturities, rendering them less susceptible to interest rate movements.''

Sundaram Money Fund was ideal for corporates, high-networth individuals and even small traders who have surplus funds in bank accounts. However to tap the retail segment, Sundaram Money Fund had lowered its minimum investment under appreciation option Rs. 10,000, which attracted even ordinary investors and a lot of small traders, he said.

The fund also has a dividend re-investment option, where dividends declared every fortnight can be re-invested into the scheme.

To make it easier for investors to exit the fund, Sundaram Newton has put in place arrangements with banks such as ABN-Amro, Standard Chartered Bank, HDFC Bank, BNP Paribas and select branches of ICICI Bank by which the bank account of the investor can be directly credited with the redemption proceeds. The fund also declares NAV on Saturdays and Sundays.

Commenting on the current scenario in stock markets, Mr. Shreekant Pandey, a director of Sundaram Newton AMC said, the same situation prevailed in the U.S. in the Seventies when the market moved sideways. But Indian corporates were reporting a steady growth in earnings. The longer the market moves sideways, the more impetus for it to catch up with earnings growth, he said. Sundaram Mutual Fund used to track the movements of its holdings every day and some stocks used to go 16 per cent up and a few in the downward direction. But in recent times the volatility in Indian markets had come down. ``Investors are now satisfied even with a 3-4 per cent gain'' he said.

Mr. Pandey said Sundaram Mutual Fund had conducted a study `SKORe' (Sundaram Keys to Optimum Returns)to understand how variable return investments work. On the stock market front the study looked at the Sensex between April 1979 and March 2001 (22 financial years). It revealed that stocks held for 10 years (there were 144 such periods between April 1979 and March 2001) were giving a return of 34 per cent in the best period and 11 per cent in the worst period.

In the bond market the returns were 8 per cent to 13 per cent for a period of three years and 3 per cent to 20 per cent on a one year period.

In money markets the returns were 6 to 12 per cent over a three month period and zero to 20 per cent over a three-week period.

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