With a target corpus of Rs 200 to Rs 300 crore, it has set an internal goal of distributing dividends at around 11 to 12 per cent. For the benefit of investors - this return is neither assured nor indicative, but just an intention expressed by officials of Sun F&C MF.

With 85 per cent of the corpus in debt instruments, the remaining 15 per cent, to be invested in equities will be crucial according to both Anurag Madan, director (marketing and operations) and Gul Tekchandani, the fund manager in charge of managing the equities investments.

That is, in order to maintain its dividend at the desired level, the management of the scheme's equity portfolio becomes important. Madan said it required the fund manager to invest only in those equities which are doing well in the stock markets. "At present, it is IT stocks," said Tekchandani, adding that at the time of investment, if IT stocks were not giving good returns, "naturally, we will not invest in them." Entry and exit into scrips would have to be finely timed so that the fund does not end up entering at a high price and yielding low returns to investors.

When asked whether this would not result in some dangerous concentration in a few scrips, Madan explained that within the investment norms laid out, they had to manuouvre and most of the investments had to be in high- yielding scrips which would give high returns. "Of course, we will try to have a diversified portfolio - this is where the skills of the fund manager assumes importance," he said.

The asset allocation of the fund and its management will be crucial, he said.Sun F&C, which manages assets worth Rs 1600 crore is planning to increase this to Rs 3500 crore by the end of the current fiscal. It has lined up a slew of schemes, including a retirement fund, Madan said. It is also planning to increase the number of retail investor service centres from the current 8 to 24, Tekchandani said, explaining that they needed to expand their investor base. The mutual fund does not plan to launch any other income schemes in the near future, but its current scheme was dictated by the need to fulfil investors' demands of a regular monthly return. "A sizeable section of investors prefer to have a regular income in their hands at the end of the month. This scheme is for them."