Tata Mutual Fund restructures corporate bond fund

Tata Mutual Fund has restructured Tata Corporate Bond Fund on the back of worrying possibility of rising interest rates. The scheme has been modified to meet investor needs for funds with an accrual focus, a release from the fund house said.

Subsequently, the scheme has restricted its investments in short average maturity thereby limiting interest rate risk.

The fund house believes that a low duration strategy will help on account of low price volatility and accrual income generation.

Currently, the scheme invests 80-100 percent of its assets in corporate debt across maturities, while investments in money market instruments has been restricted to 20 percent.

According to Murthy Nagarajan, Head-Fixed Income, Tata Asset Management, “The fund would create a portfolio of corporate bonds and money market to take advantage of favourable yields present in the short end of the yield curve compared to the current repo rate of 6.25 percent. As the maturity of the portfolio is lower, it would benefit investors in a rising interest rate scenario."

Other features:

• Fund Manager: Amit Somani
• Options: Growth and Dividend (Daily, Weekly and Monthly)
• Minimum application: Rs 5,000
• Exit load: Nil
• Benchmark: Crisil Short Term Bond Fund Index