BOMBAY, 29 December 2003 — This is not about State Bank of India (SBI), the largest commercial bank of India. This is about its mutual fund, SBI Mutual Fund.
SBI Mutual Fund has always designed products for the benefit of the Non Resident Indians (NRIs) and the NRIs have always come out richer. SBI Mutual Fund currently has an asset base of over Rs.51.00 billion, and a loyal customer base of nearly 8 lakhs. SBI Mutual’s Resurgent India Bond (RIB) has been one of the biggest successes and after the RIBs were redeemed, the NRIs have been eagerly awaiting for more to come from the stables of SBI Mutual.
And keeping with their reputation of providing another good investment tool, SBI Mutual Fund launched a specially designed investment option on Dec. 15, 2003 for NRIs. The scheme will remain open for investment at a par value of Rs.10 per magnum till Jan. 13, 2004.
This is one of the first schemes to be launched by a Mutual Fund targeted at NRIs in recent times, creating a platform for the NRIs to get better returns on their investments. The scheme offers three options to the investors ranging from a short term & long term debt options to a FlexiAsset Plan with a component of equities.
Named as Magnum NRI Investment Fund, this investment tool is ideal for investors looking for safety, security and good returns.
The Magnum NRI Investment Fund is an open-ended fund providing two debt plans & equity oriented Flexi Asset Plan for investments. The debt plan has two plans, namely Short Term Bond & Long-Term Bond.
Under the Short-Term Bond Plan, the fund plans to invest the monies into debt instruments such as government securities, corporate bonds, debentures and money market instruments, with average maturity of 365 days. And due to the nature of the fund allocation, clearly the risk is the lowest.
This plan is best suited for investors whose priority is security. The time span to be looked at around six to 12 months. Here, the fund will declare dividends on a monthly basis with no entry as well as exit load.
Then the second option is the long-term Bond Plan. Here, the fund will invest in debt instruments which have an average portfolio maturity period of 3 years. This fund is ideal for those seeking regular income at low risk and being a long-term fund, one should keep a time frame of more than 12 months. The dividends in this plan are declared quarterly. Though there is no entry load, the exit load is 0.5 percent if you decide to quit the plan within six months from the date of investment.
The third option is the Flexi Asset Plan. It will follow an Asset Allocation Model wherein depending on market conditions/based on certain triggers, the fund manager can take a view on the percentage of investments that can be allocated to equity. This plan would have a minimum of 10 percent investment in equity related instruments which will be increased up to 80 percent depending on market fundamentals. The investment universe for equity stocks will be limited to such equity stocks that form a part of BSE-100.
The fund will invest in debt as well as equities to give relatively higher returns at medium risk. This time SBI has tried to design a plan which would suit all individuals, be it short-term of long-term investors. And by putting in the option of flexi asset, SBI has tried to bring in those investors who are not averse to taking some amount of risk, as long as the return is worth it.
Another plus point in favor of the plans is that it comes from the stables of SBI Mutual Fund which has managed to establish a high repute of stability and security, especially through all the turbulent times of wild ups and downs. Here, the minimum investment is Rs.50,000 and then in of multiples of Rs.1,000. There is no maximum limit.
The scheme will declare NAV, sale and repurchase prices on all business days. All Plans will have separate asset classes and will declare separate NAVs for different options.
Dividends distributed under the scheme will be subject to a dividend distribution tax of 12.5 percent and will be tax free in the hands of the investor. Investments in mutual funds by NRIs are fully repatriable in case the funds are remitted through NRE/FCNR accounts. Short-term/long-term capital gains would be subject to a withholding tax of 30 percent/20 percent.
Switchover facility available for switchover between options of a plan and between various plans of this scheme for all investors in the scheme. Switchover between the options of a plan will be at NAV while switchover to other plans will be at NAV related prices. Switchover requests by NRIs between plans would entail tax implications as applicable for short-term/Long-term gains as such switchovers are treated as redemption and reissue. SBI Mutual Fund hopes to manage about Rs.70.00 billion worth of assets by end-March 2003. And to achieve this target, it has taken several initiatives. Apart from new launches including the above mentioned NRI fund, it has initiated a drive to sell mutual fund schemes through its branches spread across the country.
