Templeton India Mutual Fund has come out with an innovative product - Floating Rate Income Fund. It is an open-ended income fund that will primarily invest in floating rate debt instruments (65% -100%). The fund will open for subscription from January 21 to February 02, 2002.
It offers two plans - Short-term and Long-term Plans. The short-term plan is ideally suited for investors with an investment horizon of 1 to 6 months, whereas, the long-term plan is suitable for medium to long term investors with lower risk appetite, and aspiring for returns in line with the market interest rates. Minimum investment is of Rs 1,00,000 for short-term plan and Rs 2,000 for long-term plan. Entry into the fund is on a no-load basis. Exit from the Short-term Plan will be at NAV. But, in Long-term Plan, for redemption amount of Rs 10,00,000 and below, the fund will charge an exit load of 0.5 per cent if redeemed within 6 months and for amount above Rs 10,00,000, the fund will charge 0.25 per cent exit load if redeemed before 3 months.
The fund will seek to deliver returns in line with market interest rates. The returns of the floating rate funds are linked to the current yields on debt instruments and hence are not as volatile as the other debt funds.