Tata Mutual Fund on Wednesday announced the restructuring of Tata Corporate Bond Fund. The scheme would endeavour to generate returns and capital appreciation by predominantly investing in corporate debt securities of varying maturities across the credit spectrum. Earlier this scheme was known as Tata Treasury Manager Fund, which was a liquid plus scheme.
Senior officials in the fund house say, this fund used to invest around 80% of the corpus into the AAA rates paper, but after restructuring, funds will be invest in papers not below -AA. Murthy Nagarajan, head of fixed income at Tata Asset Management, said: “Tata Corporate Bond Fund is suitable for retail investors who have a holding period of more than 3 months. The fund would create a portfolio of corporate bonds and money market to take advantage of favourable yields present in the short end of the yield curve compared to the current repo rate of 6.25 %. As the maturity of the portfolio is lower, it would benefit investors in a rising interest rate scenario.”
The scheme would manage the maturity dynamically based on the interest rate outlook. It would seek opportunities across the credit curve and endeavor to take benefit from superior yield available from time to time. Tata Mutual Fund believes that currently there is a worrying possibility of rising interest rates.
In such a scenario, our fund management view is that a low duration strategy would help on account of low price volatility and accrual income generation. The fund would be based on the Tata Asset Management credit philosophy and will take exposure to good quality papers in line with the core credit framework of Tata Asset Management.