Recently, SBI Mutual Fund announced to launch a capital protection fund. However, capital protection fund category is recognized for poor returns in the financial market.
An online news portal about business and economy – economictimes.indiatimes.com, writes about the SBI Capital Protection Oriented Fund, “SBI Capital Protection Oriented Fund Series II is a five-year close-ended scheme, aimed at protecting capital on maturity through investments in equity, debt and money market instruments. The fund will be open for subscription between February 18 and March 11.”
So, it is SBI Capital Protection Oriented Fund Series II. It is a 5 year close-ended scheme. It is aimed to protecting capital on maturity through investments in equity, debt and money. You can subscribe the fund from February, 18th to March 11th, 2011.
The news portal quotes a statement of Navneet Munot also, chief investment officer, SBI Mutual Fund, “To reduce interest rate risk, the fund will invest in central government schemes or debt issued by AAA-rated companies.”
It is planned to invest in central government schemes or debt issued by AAA-rated companies to reduce interest rate risk with SBI Capital Protection Fund.
Further the news portal writes about it, “Capital protection funds invest in the safest securities, and, hence, give poor returns. Most funds in this category have returned 4-5% return over three years. SBI Capital Protection Oriented Fund Series I returned just about 3.5% over three years, when the five-year government bond yields were around 7.5%.”
It quotes a statement of Gaurav Mashruwala also, a Mumbai-based independent financial advisor, “Investors can easily protect capital by investing a part of their income (75-80%) in FDs or MIPs and the rest in the equity market. This will provide them similar payoffs at lower fund management charge.”
So, it is launched to provide investors similar payoffs at lower fund management charge. They can easily protect capital by investing a part of their income. It is just like FLEXI Fortune of Max New York Life.
