A new AMC, TRUST Mutual Fund, has entered the fund industry. While the TRUST Group has been into the financial industry for long, it is now channelising its distribution and fund-management capabilities into the mutual fund domain to reach out to retail investors. Joining the 40-player mutual fund industry, this 41st player recently unveiled its maiden offering - Banking & PSU Debt Fund. As the AMC enters the industry, we caught up with its CEO, Sandeep Bagla, to discuss various issues, ranging from their road map ahead in terms of product launches to the USP of the new fund and more.
TRUST Group, a 20+ year old company, has been active in the areas such as portfolio management, advisory, wealth management, etc. Coming from a debt heritage, we asked Bagla about the future plans of the AMC. "As SEBI has wisely categorised the funds into maturity buckets defining the risk-reward trade-off in a clear and transparent manner, we will have to launch funds to fulfil the entire maturity spectrum at some point, but we haven't decided yet. Once we have launched enough funds in the fixed-income space, then we will move to maybe credit or equity or hybrid funds," said Bagla.
AMCs usually first launch a more diversified fund but TRUST Mutual Fund's new offering is a banking and PSU fund. The investment methodology for the fund has been developed in collaboration with CRISIL as the strategic knowledge partner. On partnership with CRISIL, Bagla said, "While the fund management role is with the AMC, CRISIL will help us in the investment process. On an ongoing basis, CRISIL will be applying our rules to arrive at the investment universe. We will get constant feedback about the market and our fund's performance in terms of volatility and returns from CRISIL."
The fund will take about 80 per cent exposure to AAA banking and PSU companies and 10 per cent in government securities. Thus, it will be a AAA portfolio with no exposure to lower-rated papers. Further, the fund manager will take exposure based on pre-defined limits. The NFO will be open for subscription between January 15, 2020, and January 27, 2020. This brand-new offering will be run on a roll-down strategy with a target maturity of 3.5 years. We were wondering why this strategy at this point. Sandeep Bagla provided us some perspective. "Right now, the interest-rate scenario is slightly uncertain, so invest for three-and-a-half years, which is neither too long nor too short, just the right spot. While the rates across one-two years are fairly low, the three-four-year segment is offering higher rates. So, an investor can get a good decent return. Also, an investor can get a four-year indexation benefit, thus higher post-tax returns."