Tata Mutual Fund has launched a new mutual fund scheme, the Tata Floating Rate Fund, an open-ended pure-debt scheme, as a part of its strategy to offer a comprehensive product range to its investors across the risk-reward spectrum. The initial issue period for the scheme closes on December 22, 2003 and will re-open on December 29, 2003. 

The fund will aim to create a portfolio that will be substantially invested in quality floating-rate debt and money market instruments, fixed-rate debt and money market instruments swapped for floating-rate returns and fixed-rate debt and money market instruments. 

As the debt market is expected to be volatile in the near to medium term, call rates are expected to be range-bound and the probability of spread compression between corporate bonds and government securities is high, the Tata Floating Rate Fund will aim to generate stable returns with low risks for the investor. 

Speaking on the occasion, Ved Prakash Chaturvedi, chief executive officer, Tata TD AMC, said, “This reinforces our commitment to present products appropriate to the needs of investors in various markets. We feel that it is an appropriate time to launch a floating-rate product.” 

The Tata Floating Rate Fund is available under two options – short term and long term. Under each option there are two plans, bonus / income and growth. The minimum investment for both the options is Rs 10,000 and there is no entry and exit load for either option. 

Statutory Details: Investment manager: Tata TD Asset Management Private Limited (Investment Manager for Tata TD Mutual Fund). Trustee: Tata TD Trustee Company Private Limited. Statutory Details: Constitution: Tata TD Mutual Fund has been set up as a trust under the Indian Trust Act, 1882. Sponsors: Tata Sons Limited, Tata Investment Corporation Limited, TD Bank Financial Group Incorporated.

Nature & Investment Objective: Tata Floating Rate Fund: An open-ended pure-debt scheme providing long-term and short-term options. To provide income / bonus distribution with possible capital appreciation while at all times emphasising the importance of capital preservation. 

Risk Factors: Mutual funds and securities are investments subject to market risks and there can be no assurance and no guarantee that the schemes will achieve their objectives. As with any investment in stocks, shares and securities the NAV of the units under the schemes can go up or down, depending upon the factors and forces affecting the capital market. Past performance of the previous schemes, the sponsors or its Group affiliates is not indicative of and does not guarantee the future performance of the schemes. Tata Floating Rate Fund is only the name of the scheme and does not in any manner indicate either the quality of the schemes, its future prospects or the returns. The sponsors are not responsible or liable for any loss resulting from the operations of the scheme beyond the initial contribution of Rs 1 lakh made by them towards setting up the mutual fund. Basis risk (interest rate movement): During the life of the floating-rate security or a swap the underlying benchmark index may become less active and may not capture the actual movement in interest rates or at times the benchmark may cease to exist. These types of events may result in loss of value in the portfolio. Spread risk: In a floating-rate security the coupon is expressed in terms of a spread or mark up over the benchmark rate. However, depending upon the market conditions, the spreads may move across adversely or favorably leading to fluctuation in NAV. In case of downward movement of interest rates, floating-rate debt instruments will give a lower return than fixed-rate debt instruments. Investments in fixed income securities are subject to interest rate risk, credit risk and liquidity risk. Pursuant to allotment of bonus units, the NAV of the scheme would fall in proportion to the bonus allotted and as a result the total value of units held by the investor would remain the same. Please read the offer documents carefully before investing.