Birla Mutual Fund is planning to launch a bond fund with a difference. Birla Fixed Income Global Fund will have the charter to invest in Indian as well as international bond markets. The fund would invest in a portfolio of fixed income and money market securities including foreign debt securities. The fund may hedge its international exposure. It would benchmark its performance against CRISIL Composite Bond Fund Index. This would be a closed-end scheme, which would offer liquidity on a quarterly basis. It would offer repurchase on the last date of every calendar quarter. The tenure of the scheme would be five years.
To decide the percentage of investment in various fixed income securities the following factors would be considered: prevailing international interest rate and inflation scenario, performance of corporate sector, general liquidity, etc.
The scheme would offer both dividend and growth options. With a minimum investment of Rs 1 lakh, Birla Mutual is targeting corporates and high net worth individuals. The initial issue expenses of the scheme would be fully borne by the AMC. The fund would charge an exit load of 3 per cent if the investment is redeemed within 36 months from the date of allotment, 2 per cent if the investment is redeemed after 36 months but within 48 months from the date of allotment, and 1 per cent for investments redeemed after 48 months but within 60 months from the date of allotment. The annual expenses of the scheme would be limited to 0.75 per cent while the management expenses would not exceed 0.40 per cent.
This fund would be the first of its kind because till date we don't have a bond fund that invests across multiple countries or multiple assets. The only international debt fund in existence -- Franklin India International -- invests primarily in Franklin US Government Fund which in turn invests in US Government securities or US government backed securities. So, if you plan to invest in overseas debt markets, there is finally an option through Birla Fixed Income Global.