The Hindu Business Line : Tata MF lines up floating rate fund

The proposed Tata Floating Rate Fund, which will invest only in debt and money market instruments, will offer investors two options - long and short term, each with growth and bonus/income plans.

The scheme, which will have the NSE Mibor as its benchmark, is likely to invest up to 35 per cent of its corpus in fixed rate paper, including securitised debt and money market instruments, bearing low-to-medium risk profile.

Under normal circumstances not less than 65 per cent of the assets will be committed to floating rate paper, the offer document filed with the securities regulator has mentioned. Floating rate paper, incidentally, may include fixed rate instruments swapped for floating rate returns. Investments in securitised debt will not ordinarily exceed 70 per cent of the net assets.

The latest proposal would extend the range of Tata MF's debt offerings, said Mr Ved Prakash Chaturvedi, CEO. The fund house, co-sponsored by TD Bank Financial Group, has in the recent past worked out a number of new schemes. These include a short-term bond fund and an `income plus' fund. Taken together, the fund's debt assets were around Rs 1,000 crore at the moment, he added.

Tata MF will increase exposure to fixed rate debt under bullish conditions, and increase the same to floating rate debt under bearish conditions. The overall asset allocation may well be changed in line with the prevailing circumstances.

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