| Type |
Debt (miscellaneous)
|
Benchmark |
CRISIL MIP Blended Index
|
| Min. Investment |
Rs 5,000 |
Face Value |
Rs 10 |
| Entry Load |
Waived off during NFO stage |
Exit Load |
1.00% (max) * |
| Issue Opens |
October 14, 2005 |
Issue Closes |
November 14, 2005 |
| *Across plans but for varying durations |
The primary objective of the scheme/plan(s) launched hereunder is to generate income with capital preservation by,
Investing a portion of assets of fixed-income securities normally maturing in line with the time profile of the respective plan(s), and
Deploying a portion of the assets into equity/equity related instruments including derivatives and equity schemes of Sundaram Mutual, to generate better returns.*
*Source: Offer Document
| |
Sundaram Value Plus (SVP) is an open-ended debt fund which seeks to generate income while emphasising on capital preservation. The fund will appeal to investors with a low to moderate risk appetite. SVP has been positioned as an investment proposition which offers the stability of debt combined with the power of equities. Investors have also been given the opportunity to choose from 3 plans (across varying time horizons and equity-debt allocations).
|
Each of the 3 plans under SVP will carry a fixed tenure i.e. 380 days, 745 days and 1,110 days for the 1-Yr, 2-Yr and 3-Yr plan respectively. The plans will stand terminated at the end of the stipulated tenures. One of SVP's investment objective is capital preservation; to understand how the fund house plans to achieve the same let's take an example.
In the1-Yr plan, at least 90% of the money is invested in debt. The debt portfolio will be designed in such a manner that the amount of money invested in debt (90% or such an amount that is required), is equivalent to the original investment in the scheme i.e. 100% on maturity. This leaves the other 10% of the initial corpus to be invested in equities, from where the fund can expect to earn a 'return'.
| |
1-Yr Plan |
2-Yr Plan |
3-Yr Plan |
| Term (days) |
380 |
745 |
1,110 |
Debt instruments, securitised debt*/
money market instruments |
90%-100% |
80%-100% |
70%-100% |
Equity, equity related instruments, futures &
options including those of indices and equity IPOs |
0%-10% |
0%-20% |
0%-30% |
* Securitised debt not exceeding 50% of net assets.
The equity component will provide the much-needed gusto to the portfolio. Also the equity mandates for the plans increase in line with the portfolio maturities. For example, while the 1-Yr plan can invest upto 10% of its net assets in equities, the permissible limit is 30% for the 3-Yr plan. This is in line with the common belief that the risk associated with equity investments reduces over longer time horizons; hence SVP's proposition of providing capital preservation is not compromised with.
|
Mr. Dheeraj Singh, Head-Fixed Income, is a B.E. and holds a PGDM from IIM-Bangalore. He has over 10 years experience in managing funds in various capacities. Mr. Singh was associated with IL&FS Asset Management Company Limited before joining Sundaram Mutual.
|
A conservative fund management style has been the mainstay for schemes (both equity and debt) from Sundaram Mutual. Equity-oriented schemes from the fund house have been known for upper limits on stock and sectoral holdings; similarly debt-oriented schemes tend to be dominated by instruments of the sovereign, AAA or equivalent variety. We believe this brand of fund management will be seen in SVP as well.
Investors with a low to moderate risk appetite can consider adding the fund to their portfolios. Investors' risk appetite and investment tenure should aid them in selecting the appropriate plan.
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