Two Indian providers have announced plans to launch capital-protected products in India, following the issue of guidelines by the Securities & Exchange Board, Sebi.
Franklin Templeton, one of India’s largest mutual fund managers, with more than $1.5bn of assets, has announced three- and five-year options to its Capital Protection Oriented Fund. Each term has both a growth and an income option. The three-year product will invest approximately 80% in fixed income to meet the guarantee, with the balance in equity instruments, and the five-year product will invest 70% in fixed income.
Reliance Mutual, meanwhile, has announced it will launch two products – Reliance Capital Shield and Reliance Capital-Protection Fund. No further details were available as SRP went to press.
Last month HSBC Mutual Funds announced it will also file an application to launch capital-protected funds.
Sebi guidelines allow ‘structurally protected’ schemes to be certified by registered rating agencies on fulfillment of certain conditions, including investment in rated securities. They do not, however, allow for the use of the term ‘capital guaranteed’ in relation to products, or for the securing of a third party guarantee from banks and insurance companies, which is prohibited under the Mutual Funds’ Act.
