Union KBC MF house unveils first-of-its-kind Trigger Fund (Series 1)

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Union KBC MF house unveilsTrigger Fund (Series 1)
Union KBC MF house unveiled the first-of-its-kind Trigger Fund (Series I) scheme. The closed ended equity scheme will be opened for subscription from 14 October, 2013 until 25 October, 2013. The new fund offer (NFO) price for the scheme is Rs 10/unit and investors can subscribe to the scheme with a minimum capital of Rs. 5,000 and in mulitples of Rs. 10 thereafter.

The scheme will mainly invest accumulated corpus into equity and equity-related securities constituting S&P BSE 200 Index companies. Other than equity, scheme may also invest in money market and debt financial instruments for rebalancing the portfolio. The units of the scheme will be listed on the NSE and investors on a continuous basis can buy and sell the units on the exchange.

The mutual fund scheme is novel in the sense that it would offer automatic liquidation facility in case the NAV appreciates by 30%. The in-built feature shall prove advantageous to investors who fail to book profit at the right time . The unique equity mutual fund scheme is suitable for investors with high-risk profile seeking capital appreciation during the term of the scheme.

Working of the scheme

The unique Trigger Fund (Series I) scheme will allow investors to realize gains at a pre-specified higher level. For instance, in the event when the NAV of the direct plan of the scheme crosses Rs 13 within a three year time from the allotment date, the fund manager will wind-up the scheme on the tenth working day from the day it recorded this benchmark appreciation. However, the return to the investor may be above or below the trigger price level of Rs. 13 based on the movement of the equity markets between the time the NAV reaches the trigger point level and the final maturity date until when the fund manager liquidates the overall portfolio.

In case if the NAV of the scheme does not appreciates by this pre-defined level, the scheme will be liquidated at the end of 3 years on the NAV applicable at that time.

Illustration to explain the working of Trigger Fund Series I scheme: Suppose if an investor is allotted the units on November 1, 2013 and the NAV of the direct plan of the scheme crosses 13 on August 14, 2014. The fund manager will liquidate the scheme on the 10th business day following August 14, 2014. Further, if the NAV of the direct plan and regular plan fluctuates, redemption proceeds shall be based on the NAV of the respective plans on the maturity date.


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