BWI: IDFC Fund-of-Funds Offers Monthly Income Plan for Long-Term, Conservative Investors

Press release from Business Wire India
Source: Infrastructure Development Finance Company Limited
Monday, February 01, 2010 06:20 PM IST (12:50 PM GMT)
Editors: General: Consumer interest, Economy; Business: Banking & financial services, Business services, Financial Analyst, Stock exchanges
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IDFC Fund-of-Funds Offers Monthly Income Plan for Long-Term, Conservative Investors


Mumbai, Maharashtra, India, Monday, February 01, 2010 -- (Business Wire India) -- -- 80:20 debt-to-equity ratio

-- Focus on long-term, stable returns with easy liquidity

-- Focus on large cap equity funds to maximise growth potential

-- Issue price at Rs 10 per unit during the NFO period

IDFC, the specialised financial intermediary for national development, has introduced yet another financial product to encourage long-term financial planning. The IDFC open-ended fund-of-funds launched on January 11 offers a monthly income plan to investors. With the issue price at Rs 10 per unit during the NFO (new fund offer) period (closing Feb 9), the fund is ideal for conservative investors.

Offering growth and dividend options, the fund will invest primarily in debt-oriented mutual fund schemes (80 per cent). The allocation in equity funds (20 per cent) is aimed at improving the overall returns.

"The aim of the fund is to provide investors regular income with low volatility. The lesser equity-focused allocation reduces risk, yet the balance is such that it offers the relative safety of debt along with the higher returns of equity," said IDFC Mutual Fund MD & CEO, Naval Bir Kumar.

A fund-of-funds is a mutual fund that invests in other mutual fund schemes rather than directly investing in debt or equity securities. This allows the fund-of-funds to ensure that the asset allocation or investment is in line with the scheme objectives while leaving the bottom-up stock selection to the mutual fund schemes in which it invests.

"Basically, it uses the intelligence available in a cross-section of other funds, profiting from their resources cost-effectively," commented Naval Bir Kumar. "Clearly, a fund-of-fund structure scores because it is better to invest in an existing scaled-up portfolio through a mutual fund rather than trying to replicate the same."

Rebalancing the portfolio is also much easier for a fund-of-funds. It would simply switch funds, sidestepping the time-consuming process of researching individual equities and debt instruments.

The IDFC MIP fund-of-funds stands on two legs for better returns and stability with quick liquidity: It aims to focus largely on large cap equity funds, which would maximise growth potential, offering quicker and better returns than mid cap funds; and it offers stable returns through long-term debt investments rather than quick growth through short-term destinations. IDFC is also targeting debt funds that offer quick liquidity.

"The 80:20 debt-to-equity ratio of the fund is a studied construct," said Naval Bir Kumar, "ensuring stability for conservative investors as well as optimal growth risk. It is the ideal ratio for retirement planning."

ABOUT IDFC Ltd.

Infrastructure Development Finance Company Limited (IDFC) is one of India's premier financial services institutions with a special focus on infrastructure and national development. IDFC was set up in 1997 by the Government of India to act as a financier and catalyst for the private sector's involvement in infrastructure development in India. Over the last 12 years and more so since the company's initial public offering in 2005, IDFC has pursued a strategy to evolve into a 'one stop shop' for infrastructure finance in India, capable of meeting the increasingly complex and ambitious requirements of an expanding client base.

IDFC's business strategy involves participating in all parts of the value chain of infrastructure and providing a differentiated value proposition to its clients. IDFC's domain expertise in infrastructure combined with its product breadth across project financing, investment banking and asset management enables it to provide creative solutions to its clients' needs. IDFC has strong relationships with the private sector and government which enables it to play an important role in providing objective advice and facilitating public-private partnerships in infrastructure. IDFC is focused on contributing to evolving the right policies and frameworks to ensure sustainable infrastructure development in India. IDFC Foundation is actively involved in training various central, state and local government officials regarding public-private partnerships, the policy group provides thought leadership and advice on infrastructure policy and governance issues and the CSR team is focused on sustainable development strategies.

IDFC has played an important role in facilitating private sector involvement in Indian infrastructure and has financed over 200 projects across core infrastructure sectors such as power, roads and telecommunications. IDFC Group has mobilized and committed over US $ 5 billion in debt and US $ 3 billion in equity to infrastructure companies and projects in India. IDFC has consistently demonstrated strong financial performance over the last 5 years with profits after tax increasing at a CAGR of 25% to Rs. 750 crores in FY 2009 and reporting a net worth of Rs.6,176 crores, on a turnover of approx. Rs.30,000 crores and market capitalization of approximately Rs.22,000 crores (as on December 31 2009).

For more information visit www.idfcmf.com.


CONTACT DETAILS
Ms. Parminder Panesar, IDFC - Corporate Communications, +91 9987012340, parminder.panesar@idfc.com
Ms. Shiraz Mehta, REPUTE Public Affairs & CSR Solutions, +91 9029446959, shiraz.mehta@reputesolutions.com

KEYWORDS
CONSUMER, ECONOMY, BANKING, BUSINESS SERVICES, Financial Analyst, STOCK EXCHANGES

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