ANZ Grindlays Super Saver Income Fund -- Take it in small doses

Recommendation: Subscribe in small lots

Suresh Krishnamurthy

INVESTORS can consider subscribing in small lots to the ANZ Grindlays Super Saver Income Fund. Investments can be enhanced based on the fund's performance.

The investment objective of the fund is to generate stable returns by investing in low-risk securities. This is the first scheme launched by the mutual fund and there is no track record as such in the field of investing in India to rely on. However, ANZ Grindlays is a fairly large player in the Australian mutual fund industry and in the Indian debt markets through the banking arm.

There are a few other funds with similar objectives and a established track record in the market. As such, only investors seeking portfolio diversification need to consider investing in the fund, while first-time investors in income schemes of mutual funds would be better off considering established schemes for making their investments.

However, there is considerable uncertainty on the interest-rate front with rates threatening to move up. This makes investing in established schemes, which are more or less fully invested, a little risky in the near-term. Investors who wish to let professional managers time their investments in the fixed-income market in the backdrop of the interest rate uncertainty can opt for an investment in the fund.

Suitability: Generally, the fund's promise of investing in low-risk securities would suit the investment objectives of most investors who feel that it is better to be conservative while investing in the Indian fixed-income market.

The fund offers two options -- dividend and growth plans. The dividend plan is not suitable for investors for whom the effective tax rate on interest incomes is less than 20 per cent. Such investors would be better off choosing the growth plan and combine it with systematic withdrawal plan (SWP) that is on offer. However, investors need to hold the units for an year before exercising the SWP option for maximising tax efficiency. Units held for less than a year are treated as short-term capital assets and subjected to a higher rate of taxation compared to units held for more than a year.

Background: The Super Saver Income is an open-ended scheme without any entry load. The initial expenses of the issue are to be borne by the asset management company. The fund would levy a contingent deferred sales load of 0.5 per cent on redemptions within six months of investing. It seeks to invest generally only 10 per cent or lower in securities with a maturity of less than a year. The fund seeks to raise Rs. 1 crore as the minimum subscription amount.

Nature of Scheme: Open end

Type: Income fund

Mutual Fund: ANZ Mutual Fund

Fund Manager: ANZ Asset Management Company

Sponsors: ANZ Banking Group

Minimum amount: Rs. 5,000 and in multiples of Rs. 1,000 thereafter

Liquidity: Repurchase at NAV

Offer opened: June 13

Offer closes: July 7