SBI Mutual Fund is launching Magnum Gilt Fund, which will be dedicated to the government securities market. The initial offer of the fund will remain open from December 11 to December 21 while it will open for continuous sale and repurchase of units from January 1, 2001.
The fund will offer two options: A long-term plan with quarterly dividend and growth options and a short-term plan with quarterly dividend and growth options. While the average maturity of the short-term plan will not exceed three years, the average maturity of the long-term plan will be higher. The minimum investment in the dividend options is Rs 1 lakh while the minimum investment in the growth plan will be Rs 25,000.
Since the scheme will invest only in government securities, it will carry zero credit and liquidity risks. However, gilts are most susceptible to interest rate changes. This means that any change in interest rates will see a sharp swing in the NAV of Magnum Gilt Fund.