Alliance Capital has launched its series of closed-end defined duration income plans -"The Alliance Term Plans". The term plan will have two versions -- 98-Days Series and 378-Days Series. A new 98-Days series plan will open every Wednesday and 378-day series will be launched on 21st of every month. Entry into the fund is without any load, while redemption before maturity will carry a 5 percent charge. The first issue of the 98-Days series opened on August 1, 2001 and the 378-day series will open up for subscription on August 21, 2001. For investment ease, Alliance Capital provides investment in its cash fund, Alliance Cash Manager with instruction to automatically invest in any of the plans on the stipulated date.
The amount raised will be fully invested in fixed-income instruments, which mature along with the termination of the plan. This will include treasury-bills, government securities, PSU bonds or commercial papers or up to 50-75% exposure in government bonds and trade bills.
Given their short maturity, the term plans will be insensitive to interest rate changes. Term Plans are likely to provide predicable and superior return than a cash fund, for investors staying in the fund till its maturity. This fund could be worthwhile investment, for investors sure of their short-term cash availability.