The first one was UTI's MIP, which received a whopping response", said the chief of marketing at IL&FS Asset Management Company, Arun Ohri.

"During the launch of the Bond Fund, we observed that investors are finding it hard to adjust to the lower interest rate regime as investors are still attuned to the high interest rate regime of three years back when they earned around 16 per cent per annum", said Ohri. Ohri further added that investors were at the same time wary of mutual fund products as they had been badly hurt by fly-by-night operators and NBFCs.

The scheme offers both a dividend and growth option and has three innovationsfor the investors to help it stand out from the heap of mutual funds.

One of the innovations of the scheme is that it offers automatic reinvestment facility designed to keep in mind the requirements of the charitable trusts [income for which is tax-free].

"This offers an option for the investor for speedily reinvestment of a particular amount at the end of a particular period. In the conventional set-up, a charitable institution will have to withdraw the investment and then reinvest it to book profits in its books and this process usually takes 10 days", said Ohri.

Further, the choice of dividend option in a charitable institution is not the right one. This is because if the charitable institution chooses the dividend option, it indirectly ends up paying tax as the mutual fund pays withholding tax for dividends distributed. According to the fund, if opting for this facility under the growth plan, charitable institutions can book profits, and at the same not waste time in reinvestment of the originalamount.

Another feature that the fund has introduced is the listing of the units of its open-ended bond fund. By choosing to list the units, the fund intends to cover greater part of the country and go through stock exchanges.

The third facility that the fund intends to incorporate is the `withdrawal on events facility'. In this facility, the entire amount is redeemed as and when the account balance reaches a desired value as decided by the investor.