Birla Sun Life Mutual Fund, the fifth largest fund house in terms of assets managed, has launched equity-linked fixed maturity plans, first of its kind in the domestic mutual fund industry.
The scheme is structured in such as way that investors could make a profit, if the market goes up while they lose nothing if the market goes down. Though foreign banks have been offering similar products to high net worth investors (HNIs), this is the first time such products are being offered to retail investors.
“The product will receive the original investment plus a certain rate of return depending on market conditions. These schemes invest in short-term and medium-term debt instruments and equity-linked debentures with floating and/or fixed returns linked to equity indices,” said Bhavdeep Bhatt, head of products at Birla Sun Life Mutual Fund.
The product is ideal for the current volatile market, said Bhatt, pointing out that the fund house believes the “structural bull-run is in place”.
The mutual fund scheme has risk close to an FMP and returns close to equity. The funds would be invested in equity-linked debenture (ELD) schemes offered by foreign banks such as DSP-Merrill Lynch, Barclays and Citibank. An ELD provides investors fixed income-like principal protection together with equity market upside participation. Birla Sun Life Mutual Fund is offering two products under the equity-linked FMP; one is a