| |
Templeton AMC does away with entry load on income fund
Aabhas Pandya
NEW DELHI, January 22: Templeton Asset Management Company has removed the entry load on its income fund, Templeton India Income Fund, with effect from January 1, 1998. The fund has now introduced a 1 per cent exit load on investments parked with it for less than a year.Thus, Templeton India Income Fund (TIIF) has taken a cue from ITC-Threadneedle's income fund - High Interest - to attract its share of retail investments. Since the removal of the load, TIIF has attracted approximately Rs 8 crore of fresh investments till date, mostly from retail investors. The current corpus of the income fund is close to Rs 82 crore against its initial subscription amount of Rs 32 crore in February, 1997. "Initially, we wanted a load to attract only serious long-term investors but with the passage of time, we decided not to penalise long-term investors and at the same time keep hot money at bay. Thus, the new load structure will serve both our purposes," an official at Templeton AMC pointed out. The new load structure
serves a dual purpose. The last year has seen the emergence of a number of no-load income funds (Alliance and DSP), money market mutual funds (MMMFs) and quasi-MMMFs like Birla Cash Plus and JM Debt, which clearly provide a better alternative to corporate investors. Thus, now that corporate investments have reached a saturation point, the focus has shifted to tapping the huge retail base. On the other hand, the new load structure is indeed friendly for conservative and long-term investors. The absence of an entry load would now ensure that the entire investment would work in favour of the for investors. However, the earlier entry load structure clearly demonstrates the fact that the fund was targeting high-networth investors and corporates, but with a rider of high exit load on investments of less than one year. The entry load varied from nil to 3 per cent, depending on the amount invested. Thus, for instance, the load was 3 per cent on an amount of upto Rs 10,000; 2.5 per cent between Rs 10,000 and Rs
25,000; 2 per cent for investments upto Rs 2,50,000 and so on. While the entry load was 0.5 per cent for investments between Rs 50 lakh and Rs 1 crore, there was a five per cent exit load on redemption within a year in this bracket. For investments above Rs 1 crore, there was no entry load while the exit load was 1 per cent for withdrawing from the fund within an year. The fund has also reduced the management fee from 2.25 per cent to 1.95 per cent, effective from December 11, 1997. According to SEBI guidelines, the maximum management fee chargeable is 2.25 per cent, which includes investment management fee, custodian fee, registrar and transfer fee and recurring marketing expenses. Meanwhile, Templeton's income fund is expected to announce a dividend for its income option in March, 1998.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
|
 |
