Reliance Mutual Fund has launched a floating rate debt fund. The fund would be available under a Growth Plan (with a Growth and a Bonus option) and a Dividend Plan (available under a Dividend Pay-out Option and a Dividend Reinvestment Option). The IPO period will be from 23rd August to 27th August, 2004. The minimum subscription amount has been fixed at Rs 25,000 and in multiples of Re 1 thereafter. Additional subscriptions can also be in multiples of Re 1.
There will be zero entry and exit load on investments in the fund. Interestingly, the fund has explicitly stated that it will aim to be the cheapest fund to own. According to its estimates, the recurring expenses of the fund would probably not exceed 0.55 per cent of the applicable NAV, which would make its expense structure the lowest in the entire category.
The fund would mitigate interest rate risk by investing 70-100 per cent of its corpus in Floating Rate Debt securities (including floating rate securitised debt and Money Market instruments and fixed rate debt instruments swapped for floating rate returns). The remainder of the corpus would be put into Fixed Rate Debt Securities (including fixed rate securitised debt, Money Market instruments and floating rate debt instruments swapped for fixed rate returns).