Birla MF targets FD holders through its capital protection fund

In an SMS to distributors, Birla Sun Life MF has asked IFAs to compare its new scheme with NRE deposits which fetch returns of 3.5%

Mutual funds (MFs) eye fondly lakhs of crores lying in savings accounts and term deposits of banks but have never found a way to get even a tiny fraction of this money. Birla Sun Life MF is making one more attempt with its capital protection scheme. It has recently sent a text message to some Independent Financial Advisors (IFAs) saying: "NRE Deposits earn 3.5% interest v/s Birla Sun Life Capital Protection offering deposits plus returns. This category is a very big target segment for this fund. Please speak to all your deposit holders as this product offers safety and returns which will attract every investor class."

The message was in connection with the fund house’s new fund offer (NFO), ‘Birla Sun Life Capital Protection Oriented Fund Series I’. The company has denied sending any such message on its part. According to trade sources and competitors, Birla Sun Life is targeting to mop up Rs600-Rs700 crore from this NFO.

The fund allocation is about 90% in bonds and 10% in equity. The fund aims to expand the investment by the end of 27 months. “It has a clear objective to protect capital because many people are hesitant to enter such products because their capital is at risk. It is difficult to commit a target for the NFO at this time,” said A Balasubramanian, chief executive, Birla Sun Life Mutual Fund.

“It is targeted towards fixed deposit investors who are keeping their money in fixed income where they earn 3%-4% interest,” said Mr Balasubramanian.

The fund is rated ‘AAA’ by Credit Rating Information Services of India Ltd (CRISIL). No TDS is applicable except for NRIs. The fund aims to further reduce tax liability by triple indexation method. The NFO closes on 10th March.

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    v n purav

    1 decade ago

    most of the investor are not aware that investing in capital protection fund is lockin of 27 months as no exit optionis available.further it has come to my knowledge that mutualf und agent are purshing this product becasue they are getting 3 to 4% immediate commission plus foreign trip in reward for recommendingt this scheeme to gullible investors.
    What will happen to a retired person who invest huge investment in hope of gettting higher return than 3.5%


    1 decade ago

    what about local investors ?

    V swamy

    1 decade ago

    I am regularly reading your articles on mutual fund indstry.
    i congratulate you for writing bold facts.other publications are paints rosy picture of mutual fund becasue they may be influenced by advertisement support given by corprote houses.
    i think common man should keep out from mutual fund investments for another atleast 1 year as everyday new irregularity is unearthed.

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