Date:27/04/2005 URL: http://www.thehindubusinessline.com/2005/04/27/stories/2005042701961500.htm

Back Benchmark lifts limit on corpus size for derivative fund

Our Bureau

Kolkata , April 26

BENCHMARK MF has lifted the Rs 100-crore limit on corpus size that it had imposed on its derivative fund. The latter has waived entry load for amounts over Rs 5.5 crore.

Benchmark Derivative Fund, which is said to focus on generating market-neutral returns from risk-neutral arbitrage trades, had a self-imposed restriction for the first six months from the date of its IPO.

This was done chiefly with a view to maximise returns for investors, especially in the context of limited arbitrage opportunities.

The removal of the restriction has come into effect, a press note issued by the MF has mentioned, adding that the fund will now be available with a new load structure.

The move will enable the MF to extend it to more investors, the press note has quoted Mr Rajan Mehta, ED, Benchmark MF, as saying.

The MF has also pointed out that the derivative fund will suit risk-averse investors, particularly those who would like to increase their return without taking directional exposure on either equities or interest rates.

According to Mr Sanjiv Shah, ED, Benchmark MF, there will soon be an addition of 70 securities to the derivative segment. In this backdrop, the decision to lift the corpus limit will allow the MF to deploy larger amounts.

Incidentally, the fund in question tries to take advantage of price differences and anomalies that may exist temporarily in different markets. Given that the portfolio has offsetting positions, the return from the portfolio is not exposed to market risk, the MF has further mentioned, adding that the returns generated by it are mostly market-neutral or non-correlated with equity or debt markets.

It is simultaneously pointed out that many international investors allocate at least a small part of their portfolios to such alternate or non-correlated investments.