The Hindu Business Line : Short-term income plan from Pioneer ITI

This open-end income scheme aims to generate stable returns by investing in fixed income securities with a shorter maturity, says the CEO of Pioneer ITI AMC Ltd, Mr Vivek Reddy.

In a communication to the investors, Mr Reddy has said that this scheme would meet the demand of the investors by offering an effective `derisking, interim investment avenue', ideal for a time horizon of three months to one year.

He observed that investors became apprehensive of the sustained rally in the debt markets in recent months and falling yields and volatility at the long-end of the market. He said that a research study had showed that the investors were on the look out for protection from the volatility of the income funds and better yields than that of cash funds for intermediate period investments.

``The Short Term Income Fund is in response to the requests received from our investors,'' he added.

On the fund strategy, he said that the investments would be made in securities of shorter maturity. ``The average maturity of the investments will be maintained between 4 and 12 months,'' he added.

According to him, the recent fall in interest rates and geo-political developments resulted in a reduction of the yield differential between short and long term securities and increased volatility in long-dated securities. ``Medium term fixed income securities will be the ideal solution,'' he said and reasoned that the interest risk would be relatively lower in such investments and these could provide better returns than money market instruments.

Although the initial issue is open only for 4 days, the scheme would reopen for investments on an ongoing basis from February 4, he said and pointed out that like any other scheme, the Short Term Income Fund would offer both — growth and dividend options — and under the latter option, the investor could choose to receive the dividend on a weekly, monthly or quarterly basis. He clarified that the dividends would be `tax-free' in the hands of the investors until the end of the current fiscal.

Pioneer ITI has fixed the minimum investment level at Rs 1 lakh and in multiples of Rs 1000 thereafter.

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