JM Financial Mutual Fund is all set to launch the JM Equity and Derivative Fund. The fund plans to generate income by taking advantage of the arbitrage opportunities emerging out of mis-pricing between the cash market and derivatives market. Thus, it would invest into shares and take a simultaneous sale position in the derivatives market in the same security as and when any arbitrage opportunity is available. Any surplus cash will be deployed in the fixed income instruments.
Broadly, the scheme is said to be an income scheme, with the exposure to equity and convertible debentures ranging between 35 and 65 per cent, to derivatives (including stock futures and stock options) between 35 and 50 per cent and to money market instruments/debt/cash and fixed income derivatives between 25 and 65 per cent.
The fund's IPO opens on February 4 and would continue till February 21 2005 (the earliest closing date being February 11, 2005). The fund would offer three options including dividend, growth and bonus and the minimum application amount is Rs 5,000.
The fund would not charge any entry load. However, there will be an exit load of 2, 1.5 and 1 per cent for investments redeemed within 25, 85, and 175 days, respectively, from the date of allotment. For investments of Rs 25 lakh and above, there will be an exit load of 0.50 per cent if redeemed within 25 days from the date of allotment.
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