Birla Sunlife Capital Protection Fund (Series 14)

Birla Sunlife Mutual Fund is launching a new closed end income fund - Birla Sunlife Capital Protection Fund - Series 14( 1093 days Plan). The new fund offer will open for subscription on November 26 and closes on December 10.

The Structure

The fund will invest at least 80% in debt instruments that will mature in line with the duration of the fund, with the balance 20% of the corpus to be invested in premium exchange traded options. As a strategy to control risk, the fund will restrict its derivative exposure to only buying call options. Hence the maximum loss could be equivalent to the premium paid, not any more.

Moreover, the premium paid will be equal or lower to the coupon receivable from fixed income securities after providing for fund expenses, thus ensuring capital protection. The Fund expects to achieve down side protection by investing in debt securities maturing on or before the duration of the scheme

This marginal exposure to equity could help investors achieve superior risk adjusted returns over the tenure of the fund. The minimum investment amount is Rs 5,000 and in multiples of Rs 10 thereafter. Units will be available at Rs 10, and there is no entry load during the NFO. After the NFO, the Units of the Scheme will be listed on the NSE, where investors can buy or sell units at market prices.

Why invest?

Through this fund, you can preserve your capital, and gain a marginal exposure to equities. This has the probability to give you higher risk adjusted returns.

Why not invest?

Since the fund is close ended, liquidity is low. In case you wish to sell units in an emergency, you may have to do so at a discount to the NAV.