The Gilt fund christened as the Kotak Mahindra KGilt Unit Scheme '98 will invest exclusively in the securities issued by the government of India. KGilt has two schemes under its umbrella, the Savings scheme and the Investments scheme. The two schemes are segregated by the maturity profile of the underlying assets.

The Savings scheme will have 70 per cent of assets with a maturity period of less than one year, while the Investment plan will have 70 per cent of assets with a maturity period of more than one year. The KGilt savings scheme will target investors comprising corporate treasurers, high net worth individuals and retail investors.

The KGilt Investment scheme will betargeting investors with a longer term investment horizon which would include corporate treasuries, retail investors as well as trusts, pension funds etc. The scheme will also have, apart from safety, capital gains with indexation benefit on a relatively risk free investment as the scheme will invest only in government securities. The equity scheme K30 will invest predominantly in equity and related instruments. The portfolio will generally comprise of equity of not more than 30 companies.

"It is a misconception that debentures and bonds are less volatile than government securities. Unfortunately, fair value of debentures or bonds is often not correctly disclosed. This is due to the lack of liquidity of these instruments and hence the non-availability of market prices. The prices of these debentures and bonds are infact derived with government securities as benchmark. This has led to the NAVs of many debt funds to be optimistic", said the chief executive officer of Kotak Mahindra Asset Management Company,Shekhar Sathe.