Templeton mutual fund manages an equity scheme named Templeton India Growth Fund with Rs 82.16 crore assets, an income scheme, Templeton India Income Fund, with a Rs 154.43 crore assets and Templeton India Liquid Fund, for investments in money market instruments.

"We plan to launch a dedicated gilt fund shortly and the prospectus has already been filed with Sebi. The move to launch a gilt fund comes in the wake of RBI allowing pension, provident, gratuity or superannuation funds to invest in 100 per cent gilt funds", said Nilesh Shah, fund manager, Templeton Asset Management Company.

RBI in its last credit policy permitted the provident funds to invest in dedicated gilt funds. The currentregulations allow pension, provident and superannuation funds to invest the designated 40 per cent for Central and state governemnt securities and 20 per cent under discretionary limits to be invested in the sovereign trust.

"Returns in the short term would not be much but investments in the gilt fund for the long term would definitely be more than the returns provided by the provident funds. This is because at present the provident funds are not allowed to sell and have to remain invested till they can liquidate it. While the gilt fund investments will continue to ride the yield curve by selling and buying again. This would help the Gilt funds to give better returns", said Shah.

According to Shah this move will benefit the small provident funds as these funds have to pay a prmium to buy or sell government securities and by investing in gilt funds these provident funds would be maximising their returns.

Mutual funds have been indicating plans to launch gilt funds since the permission by the RBI andalmost all the mutual funds have plans to launch a gilt fund. The Kotak Mahindra Mutual Fund was the first gilt fund in the country which currently have asstes under management aggregating Rs 200 crore.