Overview: BNP Paribas Mutual Fund has launched a new fund named as BNP Paribas Government Securities Fund, an open ended Debt scheme. The New Fund Offer (NFO) price for the scheme is Rs.10 per unit. The new issue will open for subscription from 18th April and will close on 29th April 2013. The scheme reopens for purchase and sale within 5 days of allotment.The scheme seeks to collect a minimum subscription amount of Rs. 20 crs during the NFO period.
Objective & risks: The objective of the scheme is to seek to generate income and capital appreciation by investing in a portfolio of government securities of various maturities issued by Central & State Government. However the investment carries standard risks like Credit, Market, Interest Rate, Liquidity, Concentration, Sovereign risks.
Asset Allocation: The scheme shall invest 65-100% in Government Securities issued by Central / State government and Treasury Bills with low to medium risk profile , and 0-35% in Reverse repos in Government Securities and CBLO. Units of liquid funds and units of schemes predominantly investing in Government Securities with low risk profile.
Investment Details: The minimum application amount is Re 5,000 and in multiples of Re 1 thereafter. The scheme's performance will be benchmarked against I Sec Composite Gilt Index. There are no entry or exit loads. The scheme offers Growth and Dividend (Payout and Reinvestment) options. The scheme offers SIP, STP, SWP, Online transaction and transaction through Stock Exchange platform. The AMC has estimated that up to 2.25% of the daily/weekly average net assets of the scheme will be charged to the scheme as expenses.
Fund Manager: Mr. Puneet Pal is a Commerce Graduate & MBA from SIBM Pune. Mr. Puneet started his career as a Dealer with UTI AMC in July 2001, then became Assistant Fund Manager in December 2003 and, finally designated as the Fund Manager with Tata AMC in September 2006. In August 2008, he again joined UTI AMC as Sr. Vice President. Now, from February 16, 2012, Mr. Punnet Pal has joined BNP Paribas MF as Deputy Head-Fixed Income.
Conclusion: BNP Paribas Government Securities Fund will invest primarily in the debt and money market instrument issued by Central / State government and Treasury Bills. Given the current scenario of easing or delayed easing interest rates in the domestic front, investing in Gilt and long duration funds is considered as a good investment strategy as these can generate better returns once the interest rates start to fall. Further the performance of the fund house in debt schemes has been good.