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UTI launches open-ended debt fund
Unit Trust of India launched its first open-ended 100 per cent debt fund and will invest in fixed income instruments like debentures, government securities and other money market instruments. S K Basu, executive director of UTI, Bombay, said the fund which will be open for subscription from May 4 to June 17,1998, would thereafter become open ended from July 18, 1998. The fund aims to provide regular savings facility, easy liquidity and attractive post-tax returns to the investors through capital appreciation. The entire investment of the fund will be in debt and money market instruments. The income and growth will be ploughed back and reflected in the net asset-value (NAV). There will be no income distribution under the scheme. The scheme, Basu said would be tax efficient as the capital gains made on repurchase of investment, which is held over a period of one year, will be treated as long term capital gains and, hence, will be subject to lower tax rate of 20 per cent as per the prevalent tax laws. The UTI bond fund, he said, offered capital gains option, minimum investment of Rs 10,000 without a maximum limit and sale purchase at NAV all the year round. For repurchase done before one year of investment, there would be a sales charge of 1.5 per cent, which would be waived if the repurchase is made after one year of investment. The fund offers easy liquidity and can be repurchased partially. However, there has to be a minimum balance of Rs 10,000 in the individual account. The investment objective of the fund is to build up the NAV steadily over a period of time and the growth of NAV would be treated as capital gains under the Income Tax Act.