IDBI AMC launches first NFO

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SummaryThe asset ,management company says it will break-even in 3 years.

The latest entrant in the country's mutual fund business IDBI Asset Management Company today said it targets to break-even by 2013-14.

The fund house, a wholly-owned subsidiary of state-run IDBI Bank, launched its first new fund offer (NFO) – IDBI Nifty Index Fund -- on May 3, which would close on May 31.

"For the time being we plan to launch only index funds at least for next few years. We are targeting a break-even within three years," IDBI AMC MD and CEO Krishnamurthy Vijayan said.

The AMC had received approval from the market regulator SEBI in March for launching the mutual fund products. The scheme re-opens for continuous sale and repurchase from June 30. The face value of the new issue will be Rs 10 per unit.

"For the time being we will concentrate on equity products benchmarked against index. We will be launching short term, liquid and all kind of debt products. Debt products are in the planning stage," Vijayan said.

The asset management company is currently using the IDBI Bank network to distribute the products.

"IDBI Bank already has 700 branches and 300 more are likely to be added. We have set up 12 distribution centres across all major cities," he added.

When asked if the fund house is looking for acquisitions, he said: "If the right opportunity comes then surely we would be ready to buy something. As of now we are planning to grow organically."

The fund would be investing all stocks comprising the S&P CNX Nifty Index with the objective. "We will focus on Nifty companies so that we do not take investment decision on our own, we will leave it to the performance of the market," Vijayan said.

The minimum investment will be Rs 5,000 and in multiples of Rs 100 thereafter. Under the Systematic Investment Plan (SIP) investors can pay Rs 500 per month for a minimum period of 12 months.

The country's mutual fund industry currently has 37 players, with Reliance Mutual Fund being the largest.

At the end of April, the average assets under management (AUM) of the industry rose by Rs 20,836 crore or 2.71 per cent to Rs 7,68,361 crore.

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