Deutsche MF pioneers launch of inflation-indexed bond fund

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Deutsche MF pioneers launch of inflation-indexed bond fund
Deutsche Asset Management India on Wednesday launched two funds namely DWS Inflation Indexed Bond Fund and DWS Top Euroland Offshore Fund. With the launch of the inflation indexed bond fund, Deutsche Mutual Fund house became the first entity to launch such a fund that aims to provide inflation-adjusted returns.

DWS Inflation Indexed Bond Fund's new fund offer will remain open for subscription from January 16 until January 27, 2014 while the other DWS Top Euroland Offshore Fund can be subscribed from January 9, 2014. Both the newly launched funds are open-ended schemes.

DWS Inflation Indexed Bond Fund will invest primarily in inflation-indexed bonds. Such instruments primarily issued by the government of India features return (principal and interest payments) that is linked to WPI or wholesale price index inflation.

As per the mutual fund house, the open ended debt fund will invest approx. 72% of the total corpus in IIBs while the re-maining would be invested in other G-securities. The benchmark for the fund is I-Sec Composite Index.

Investment objection of the scheme: With investment in inflation indexed bonds, the funds primary objective is to provide investors with above inflation returns. According to the last held RBI auction, WPI-linked IIBs are currently offering a competitive yield @ 3.6% above WPI while WPI as on November 30, 2013 stands @ 7.5%. So, IIBs by and large are highly attractive for investors.

Other benefits: The fund further aims to leverage accrual income plus any capital appreciation on IIBs.

Liquidity and Tax-efficient returns: By investing in the fund through the mutual fund route, investors can realize liquidity benefits together with tax-efficient returns.

The other launched fund DWS Euroland offshore fund is an open- ended overseas fund of funds (FOF). The new fund of fund will invest in European equities. The benchmark for the underlying fund is Euro Stoxx 50.

Story first published: Thursday, January 9, 2014, 15:23 [IST]
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