Benchmark AMC has launched an innovative scheme called Benchmark Split Capital Fund. The fund's initial offer will be open from May 12 to May 26. The minimum investment required to invest in the scheme is Rs 1 lakh.
Benchmark Split Capital is a five-year close-end fund that will invest in a universe of 10-12 corporate bonds and investors will be free to choose between Class A or Class B or a combination of both.
The concept of split capital is to distribute credit risk between two separate classes of units in order to deliver different risk-return combinations as per the investors' requirements. The Class A (Preferred) units will be rated AAA(SO) by Fitch and will have finite maturity value, determined on the date of maturity itself. Thus, they will be suitable for low-risk low-return debt investors.
On the other hand, the Class B (Subordinate) units will get the residual return and be the first hit in case of a default. Class B units, being NAV-linked, will be suitable for high-risk high-return debt investors. Both classes of units would be growth units.
Benchmark Split Capital fund will have continuous rating surveillance with periodical reporting and portfolio disclosure.
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