With a view to strengthen their debt fund offerings Principal Mutual Fund has launched a floating rate debt fund. The fund would be available under a Short Maturity Plan (suitable for investors with short investment horizons) and a Flexible Maturity Plan (suitable for investors with medium to long-term investment horizon as under this the fund manager would have the flexibility to ascertain the average maturity of the portfolio with a view to maximise the returns). Each plan will have two options viz. Regular Option and Institutional Option. Further each Option will offer two sub-options - Dividend Option and Growth Option.
The IPO period is from August 19 to September 6, 2004. Subsequently, the scheme will open for ongoing subscription from September 10, 2004. The minimum subscription amount has been fixed as follows: Short Maturity Plan: Regular Option - Rs. 5000, Institutional Option - Rs. 1 crore Flexible Maturity Plan: Regular Option - Rs.5000, Institutional Option - Rs.1 crore; and any amount thereafter under each Option of the Plans. Additional investment amount shall have to be Rs 500 under the Regular Option of both the plans and Rs.1 lakh under the Institutional Options of the two plans.
There will be zero entry and exit load on investments in the fund under the two options of the Short Maturity Plan as well as under the Institutional Option of the Fixed Maturity Plan. However, under the Regular option of the FMP while entry load would be nil, an exit load of 0.25 per cent would be levied in case the investments less than Rs 10 lakh are redeemed within three months.
The fund would seek to mitigate interest rate risk by investing 65-100 per cent of its corpus in Floating Rate Debt securities and the remainder of the corpus in Fixed Rate Debt Securities