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Alliance Cap plans bond scheme

R.Y. Narayanan

COIMBATORE, July 23

THE Alliance Capital Asset Management has sought the approval of SEBI for launching a monthly bond scheme under its Monthly Income Series umbrella.

Alliance Capital already has four debt/income schemes- Alliance Liquid Income, Alliance Monthly Income, Alliance Cash Manager and Alliance Government Securities Fund. The total corpus under the four schemes was around Rs 2,260 crore as at the end of last month.

The fund has intimated its investor members that the proposed monthly bond scheme would invest 100 per cent in debt and money market instruments. This will be in variation from the fund's investment strategy for Alliance Monthly Income Scheme which has a n exposure to equity.

In its latest newsletter, the fund has explained that due to extreme volatility in the equity markets, the Monthly Income Scheme's performance suffered. It returned an absolute performance of 5.73 per cent (unannualised) in the last six months.

Alliance Capital said that it would be shortly launching a bond scheme under a Monthly Income Series umbrella which would not have any exposure to equity. This scheme was expected to have a lower volatility than the existing monthly plan and was aimed at investors inclined to opt for a more stable monthly dividend pay-out.

But the news also carried a rider - with lower volatility, investors may have to settle for lower returns over a period of time.

Mr Samir Arora, Head-Asian Emerging Markets, Alliance Capital, drew attention to the annualised return of 25.9 per cent in the past six years of Alliance '95 Fund and the 35.8 per cent return of Alliance Equity Fund in the past three years when markets l unged from one crisis to another - from nuclear explosion to global IT meltdown.

With technicals weak and liquidity low, even trading opportunities were increasingly becoming rare, he added.