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Morgan Stanley MF Makes Debt Call

Morgan Stanley MF is looking to expand

After having spent a decade-and-a-half in India and having just two equity funds to show for it, Morgan Stanley Mutual Fund is looking to expand and diversify operations by getting into the debt space and thereby offer an alternative to market-crash-burnt investors.

The fund has launched two new fixed income funds today — Morgan Stanley Short Term Bond Fund and Morgan Stanley Active Bond Fund. While the former is a short-term debt fund, the latter is medium-term.

Morgan Stanley Short Term Bond Fund is aimed at investing in short- to medium-term debt and money market securities and will be benchmarked against the CRISIL Short-Term Bond Fund Index.

It will be positioned to benefit from a fall in short-term interest rates. Morgan Stanley Active Bond Fund seeks to actively manage a portfolio of debt and money market securities. With a flexible investment strategy, it aims to generate an optimal risk-adjusted return by taking advantage of any fall in the overall interest rate structure.

The fund may well have taken a calculated call. With industrial output falling by 2.3 per cent, it may well have left the situation ripe for further interest rate cuts by the Reserve Bank of India.

Ritesh Jain, earlier with Principal Asset Management Company, will be the fund manager of these two funds.

Morgan Stanley MF, till now, had just two equity funds in its basket, namely, Morgan Stanley Growth Fund (MSGF) and Morgan Stanley A.C.E. MSGF was launched as far back as January, 1994 as a close-ended diversified equity fund. This fund was converted into an open-ended fund from January, 2009 after it completed it tenure of fifteen years. As of April 30, 2009, the fund had returned 11 per cent per annum since its launch and had average assets under management (AAUM) of Rs 1,506.57 crore in the month of April.

Its other equity fund, Morgan Stanley A.C.E. was launched in the midst of a market meltdown in March, 2008 and managed to garner just Rs 80 crore during its new fund offer (NFO). While the fund has shed 25 per cent since its launch as of April 30, 2009, its average assets for the month of April stood at Rs 81.05 crore, the gain may well have come from fresh inflows.