Name of new fund offer (NFO)
Birla Sun Life Capital Protection Oriented Fund–Series 1.
What is it about?
The scheme aims to prevent, and not totally eliminate, capital erosion. It’s a 27-month, closed-end fund that will invest around 90% in debt papers and the rest in equities. The debt component aims to grow in three years, equities will be actively managed.
It has got “AAA-” from rating agency Crisil Ltd, indicating highest portfolio safety. It will keep monitoring the portfolio for any deviation from its mandate. Though Crisil reserves the right to withdraw or lower its rating periodically, most funds do not jeopardize the portfolio’s quality as a rating downgrade damages reputation.
It works only if you are looking to stick around for three years and aim for moderate returns. Your only exit window will be the stock exchange, where you can sell your units and you may not realize your fund’s worth.
MONEY MATTERS TAKE
The fund doesn’t assure capital protection or returns. While it aims to prevent capital erosion, it will also aim to outperform a bank fixed deposit (FD) with a similar term. The fund’s track record in equity and debt is good. Opt for it if you wish to earn a bit more than an FD. But if you are willing to wait for three years and like to take a bit more risk, monthly income plans are better options.