Indian Bank is likely to sell the existing funds managed by its subsidiary -- Indfund Management to Tata AMC. Indfund Management was set up in 1994, which floated ten closed-end funds. Of the ten, six funds have been redeemed of which three carried return assurance.
The AMC faced problem in redeeming its assured return funds. The key problem faced was a return assurance while the portfolio was equity tilted. And in the bear market since 1994, these funds witnessed massive capital erosion. The fund currently has Rs XX crore under management in its four closed-end fund -- Ind Navratna, IndTaxshield, Ind Shelter and Ind Sagar.
Of the four, three are closed-end tax savers. By acquiring the management of the four funds, Tata AMC will have to offer exit option to investors. All the funds have been dismal performers with massive erosion of capital for investors. As on May 23, 2001, Ind Navratna, IndTaxshield, Ind Shelter and Ind Sagar have posted an annualized return of -6.48 %,-0.93%,-3.9% and 5.46%.