Tata MF launches equity management fund with hedging option
Business Line — May 16, 2006

Tata Mutual Fund today launched a close-ended equity management fund that invests in equities combined with a derivative option with the investment being converted into an open-ended fund on the completion of 18 months.

"Presently, we see good economic fundamentals from a long term view. It includes a high GDP growth, higher level of expenditure into infrastructure, increased global business for BPO sector and new opportunities in pharmaceutical and IT industries," the Managing Director of Tata Asset Mr Ved Prakash Chaturvedi said.

The fund aims to moderate downside risk to the portfolio through hedging the portfolio by using stock or index derivatives.

Besides, the fund would capitalize on short term as well as long term through stock specific or index oriented shorting strategy, he added.

The extent of hedging of the portfolio is determined based on the month end weighted average PE ratio of the S&P, CNX, Nifty and also depends upon the fund mangers' perception of the markets.

An investor would have to invest a minimum of Rs 5,000 during this 18-month close-ended scheme. However, the investors would have a weekly exit option after paying an exit charge.

The exit charge would depend upon the total span of the investment and this rate would narrow down as per the passing of each week.

The offer opens on May 15 and would close on June 9.