Sahara Mutual may unwrap closed-end plans

Sahara Mutual Fund may bring back closed-ended schemes in a new avtaar. After dominating the initial phase of mutual fund industry in the country, the closed-ended schemes gave way to the open-ended variety.

However, Sahara feels that mutual fund schemes with a stipulated time period could be an ideal substitute of good old bank fixed deposits, which are now offering a meager return of 5-6 per cent.

Customised closed-ended schemes are likely to figure in the forthcoming bunch of new schemes of the mutual fund arm of the Sahara group.

The fund is planning to add 20-25 new products in its portfolio in the next one year.

A majority of these new products would be equity-based. Incidentally, Sahara is launching two schemes in third week of November "" a mid-cap fund and a floating rate fund, as part of its formal launch. Currently, it is managing the portfolio of First Mutual, which it acquired a few months back.

R Balakrishnan, chief executive of Sahara Asset Management Company, told Business Standard that the fund would come out with innovative closed-end schemes.

"I personally feel that close ended schemes will make a comeback in new form in this low interest rate regime," he said. He pointed out that Sahara would address the main drawback of closed-end fund "" that is, liquidity. It would offer an exit option to investors on a half yearly or yearly basis, apart from listing the schemes on exchanges.

"Like for a five year scheme, if an investor exits after one year then exit load would be maximum. It would gradually come down like in case of bank fixed deposits where there is some penalty for premature withdrawals," added him.

Sahara Asset's chief marketing officer Arindam Ghosh said the fund will have products in all categories.

"Once we have all the products, we shall stress on customised products. Our thrust now would be on equity. We would launch different varieties of balanced funds and asset allocation funds, which we feel would do well in the current scenario," Ghosh said.

Commenting on the marketing strategy, Ghosh added that Sahara would open 29 new branch offices in the next 6-9 months. "Now we are in six states. We would like to have presence in almost all the states," he said.

Ghosh said Sahara currently has six offices in Kolkata, Mumbai, New Delhi, Lucknow, Bangalore and Chennai.

The mutual fund arm of Sahara is also drawing up plan to utilise the seven lakh strong army of agents of the group.

"We shall educate a bunch every month so that they could pass the examination of the Association of Mutual Funds of India. But this process will take 2-3 years. Now we shall utilise the conventional channels available till then," he added..