Sundaram Mutual Fund has announced a new fund offering (NFO) for an open-ended equity scheme, Sundaram Equity Savings Fund. The scheme aims to invest in equity, debt as well as arbitrage. The NFO period begins on November 16 and will end on November 30, 2018. The scheme will reopen for subscription and redemption of units on December 14, 2018.
By investing across three different kinds of asset classes, the Sundaram Equity Savings Fund aims to have a potentially lower risk than pure equity funds. The debt component of the scheme will invest in high-credit quality (AA+) bonds with a shorter duration (less than two years). The equity portion will invest primarily in large cap stocks to lessen the effects of market volatility. Additionally, the scheme will also take arbitrage or hedging calls, primarily cash futures arbitrage on individual stocks.
According to the draft filed with SEBI in September 2018, Sundaram Equity Savings Fund shall invest (under ‘normal’ circumstances) between 65 percent to 90 percent of its assets in equity and equity-linked instruments. These may include derivatives like stock and index futures, stock and index options, which shall be capped at 75 percent. Investment in money market and fixed income securities shall be capped at 35 percent. It should be noted that this is only an indicative asset allocation.
Sundaram Equity Savings Fund will be benchmarked against the Nifty Equity Savings Index. The Nifty Equity Savings Index is an apt benchmark for this fund as the index has exposure to equity, debt and equity arbitrage instruments.
| Index Name | 1-yr Returns (%) | 5-yr Returns (%) |
| Nifty Equity Savings Index | 7.75 | 10.31 |
*Returns data as of Sept. 30, 2018
Fund managers for the equity portion of the scheme are S Krishnakumar and S Bharath, according to the information on Sundaram Mutual’s website.
Key information about the Sundaram Equity Savings Fund NFO:
| NFO period | November 16 – November 30, 2018 |
| Minimum application amount | Rs. 5,000 |
| Exit load | 1 percent exit load, if units redeemed or switched out within one year of allotment date
No exit load after one year |
| Benchmark | Nifty Equity Savings Index |
| Fund managers | Equity – S Krishnakumar and S Bharath |