Birla Sun Life Capital Protection Fund – Should you invest?

Mutual Funds

oi-Monika

By Monika Nihalani

Published: Wednesday, September 21, 2011, 9:57 [IST]

The Reserve Bank of India's tough battle against inflation has raised key policy rates for the 12th consecutive time. RBI follow anti-inflationary stance to contract money supply in the market. With this people will be left with little or no extra surplus to invest in equity markets.

During high interest rate regime, people prefer staying away from riskiest investments. So, if you want to invest with the aim of capital protection, then here is the option for you. Birla Sun Life Mutual Fund has launched Capital Protection Oriented Fund – Series 7.

This is a close-ended scheme with the duration of 36 months. Along with capital appreciation, the scheme is also targeting capital appreciation through investments in equity, debt and money market instruments.

The fund is especially designed for risk-averse investors who don't invest in equities because of high risk associated with their nature. Though the category has yielded average performance, but the fund ensures principal protection.

The returns of Capital Protection Oriented Fund are not that attractive because of their low risk nature as these funds invest in safest instruments like government securities or AAA rated corporate bonds which offer low returns. Birla Sun Life Capital Protection Oriented Fund Series 1 has given about 3.04% returns over the period of one year while the category has returned 1.54%. Though category has given returns of 7.19% in three-year.

Basic Details:
NFO Opens: September 15, 2011
NFO Closes: September 29, 2011
NFO Price: Rs.10 per unit
Options: Growth option
Minimum Application Amount: Rs 5,000 per application and additional of Rs 10, thereafter
Exit Load: Nil
Benchmark: CRISIL Balanced Fund Index
Fund Manager: Satyabrata Mohanty and Ajay Garg

View: The fund doesn't guarantee of any returns but it just assures capital protection. So, the fund is specially designed for risk-averse investors who are afraid of investing in volatile markets and aim at capital protection.