With the launch of Money Back Plus, GICMF will tap the market after a gap of more than two years. The last scheme from the GIC stable was GIC Suraksha in 1996 which had garnered Rs 48 crore.

Unlike a number of closed-end debt schemes that assure returns on initial investment, Money Back Plus has assured only the principal amount. Appreciation, if any, will be distributed on redemption of the fund after seven years. Every unitholder will receive his initial investment through monthly warrants.

The scheme offers two options - Monthly Capital Redemption where a unitholder will get 94.5 per cent of the invested amount through 84 post-dated warrants. The balancecapital amount (5.5 per cent) will be returned with capital appreciation, if any, on redemption. For instance, if an investor puts in Rs 10,000 in the fund, he will receive Rs 112.50 as monthly payment for 84 months.

Under the second plan, christened Deferred Capital Redemption plan, the investor has the option to defer the monthly redemption of his capital by one, two or three years. Thus, he will receive higher monthly capital payment. For instance, an investment of Rs 10,000 will yield Rs 131.25 (if deferment is for one year), Rs 157.50 (if deferment is for two years) and Rs 196.88 (if deferment is for three years).

``An investor is taking a chance since the fund guarantees only the initial investment of Rs 10 on each unit although, in all likelihood, it will provide appreciation of investment since interest income will continue to accrue to the NAV since there is no provision for payout during the tenure of the scheme,'' said an analyst.

Since the fund plans to invest upto 100 per cent in debt (withthe option of investing a maximum of 15 per cent in equities), the performance rests on the fund's ability to pick up safe debt instruments with reasonable returns coupled with returns from the equity component.

``Even the 15 per cent equity exposure can give decent returns provided the scrips in the portfolio have the potential to appreciate since it is a reasonably long-term fund,'' said a fund manager.

While an investor will receive principal and capital appreciation, if any, on redemption, the repurchase will be at NAV-based prices. For 6 to 12 months, repurchase is likely to be at a discount of 5 per cent to NAV. For second and third years, the exit load will be 3 per cent while repurchase will be at NAV after 3 years.