Capital protection oriented funds make a come back

MUMBAI: New fund offers of ICICI Prudential Capital Protection Oriented Fund (IPCPOF) and Union KBC Capital Protection Oriented Fund (UKCPOF) are open now. Capital protection oriented fund is a closed ended fund.

It invests in the mix of equity and debt, with the primary objective to protect the capital at the maturity of the scheme and offer some upside through equity investments.

IPCPOF has tenure of 60 months and UKCPOF has tenure of 36 months. Both these schemes are closed ended and aim to protect investor money by putting most of the investors' money in debt instruments. UKCPOF restricts investments in equity to 17% whereas IPCPOF restricts it to 30%.

"Investors keen to lock in their money in relatively safe investment option and earn better than a fixed deposit can look at capital protection oriented funds," says Anup Bhaiya, managing director, Money Honey Financial Services. As markets have seen a good rally in last one year, investors are cautious about investing in equities. Capital protection oriented funds can be of help in such a situation.

New fund offer of IPCPOF closes on 28 January and UKCPOF closes on 4 February. You need minimum Rs 5000 to invest in these funds. Units of both the schemes are to be listed on stock exchanges. Both the funds offer dividend and growth options and can be bought through a distributor or directly from the mutual fund.