I want to know about Union KBC’s liquid fund. I have been investing in it since 14 June 2011 and the NAV is currently around Rs 1,056. The NFO was of Rs 10. I also want to know if I should invest in IDBI Dynamic Bond fund.
-Sunita
The NAV of Union KBC’s liquid fund hasn’t gone from Rs 10 to Rs 1,056. The face value of the fund was Rs 10 when it was launched. The change in a liquid fund’s NAV is quite minimal, appearing in the fourth decimal point. They give you returns of 7-9 per cent per annum and hence, such a change in an NAV of Rs 10 is hard to show. This is why a lot of liquid funds have raised their face value from Rs 10 to Rs 1,000. This is just a change in method and hasn’t affected your investments in any way.
To answer your second question, all income funds come in two formats: one that invests in bonds within a defined tenure and the other which will change the tenure depending on the interest rate outlook. Hence, you can invest in a dynamic bond fund which will take advantage of changing interest rates.
This article was originally published on February 20, 2012.
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