Innovation Once More | Value Research Benchmark Mutual Fund set to launch Gilt Benchmark ETF
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Innovation Once More

Benchmark Mutual Fund set to launch Gilt Benchmark ETF

Innovation, it seems, is the key business mantra of Benchmark Mutual Fund. The fund house has been known for its first-of-its-kinds investment schemes. In the past, Benchmark Mutual Fund has been the first AMC to launch a Gold ETF, a Mid Cap Index Fund and a Liquid ETF. And keeping in line with this tradition, the fund house is set to launch the Gilt Benchmark Exchange Traded Fund.

An offer document of the Gilt Benchmark ETF has been filed with SEBI for approval. The scheme will be an open-end exchange traded scheme listed on the exchange with a maximum duration of 10 years. The units under the scheme will be redeemed fully after this period of a decade. However, investors can redeem their units on any business day before the maturity period.

Rajan Mehta, executive director at Benchmark Asset Management said “The maturity of the fund will coincide with the maturity of underlying G-sec.  Here the investor can take interest rate call through fund. Being an open-end fund, new units can be created or redeemed through in kind method. In kind method used by ETFs is superior because it insulates long term investors from short term traders (which was the major flaw in the FMP structure).”

The fund will invest fully in securities issued by the Central Government or State Governments. This would include securities which are guaranteed by the Government of India. The scheme, being an open-end exchange traded scheme, will be available in a dematerialized form and can be traded like any other stock on the National Stock Exchange of India Ltd. (NSE).

The scheme will not charge any entry or exit load. It will be benchmarked against the I-Sec Li-Bex Index and will be managed by Mr. Vishal Jain, who has been working with Benchmark Mutual Fund since October 2000. At present, he is a Chief Investment Officer of the fund house and is responsible for the fund management of all the schemes of the fund house. Currently, he actively manages four schemes - Nifty BeES, Bank BeES, Benchmark Equity & Derivatives Opportunities Fund and Gold BeES.

If approved, this fund will be the first of its kind in the industry.  At present, Benchmark Mutual Fund manages assets worth Rs. 2781.7 crore (Nov 2008).

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