Alliance Capital will launch a new fund -- Alliance MIP Bond Option. The new fund will be fully invested in bonds and unlike other MIPs will not have any equity allocation. Hence the fund will be like any other open-end debt fund which will strive to give monthly dividend. The fund is expected to be launched in July, 2001, subject to SEBI approval.
Alliance Capital already has a full menu of bond funds -- Alliance Cash Manager - a short-term debt fund, Alliance Government Securities Fund - a gilt fund with short and long-term variants, Alliance Liquid Income - a medium term debt fund and Alliance MIP - a debt fund with marginal equity.
Alliance Capital was the first to launch its open-end MIP. And after a roaring first year, the fund has struggled hard to guard its NAV, on account of its small equity allocation the loss on which fully negates the gain on its bond portfolio. Besides, the name and the initial performance has raised expectations of regular monthly dividend. And the MIPs have realised that it may not be possible to give regular monthly dividend based on a very small equity allocation even. Despite a mandate to invest up to 15% of their assets in stocks, of the eight MIPs, only Alliance has a 6% exposure to equities.
As Alliance wants to retain the profile of its existing MIP, hence the need to launch a new fund. Except for the branding, the new fund's portfolio will be like its medium-term debt fund -- Alliance Liquid Income. Ofcourse, the novelty will be the monthly dividend from a debt fund.