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Templeton India Corporate Bond Opportunities Fund (TICBOF)

Income Fund from Templeton India

Templeton India Corporate Bond Opportunities Fund (TICBOF) is an open-end income fund, which seeks to provide regular income and capital appreciation by focussing on corporate securities.

The fund manager will invest in corporate securities with an optimal liquidity and credit risk. He will follow an active investment strategy taking defensive/ aggressive postures depending on the opportunities available at various points in time. The minimum amount on application is . 5,000. The NFO closes on November 29.

An income fund invests in a mix of corporate bonds as well as government securities. The fund manager has the option to change the maturity profile of the fund based on the interest rate environment. So, in a rising interest rate scenario, the average maturity period of the portfolio is low (typically 1 to 2 years) while in a falling interest rate environment, the average maturity period is high (typically 4 to 5 years). TICBOF will not invest in government securities and the maturity will be capped at 36 months. In a bid to deter short-term investors, the fund charges a steep exit load.

While most income funds have a exit load of 1% for a year, TICBOF will charge an exit load of 3% if the investment is redeemed within 12 months from the allotment date, 2% if redeemed after 12 months but within 24 months, and 1% if redeemed after 24 months but within 30 months.


The Reserve Bank of India has raised interest rates several times in the last one-and-a-half year. With growth moderating in the Indian economy, the interest rate cycle seems close to its peak. Hence, it is likely that the central bank will pause with rate hikes. You can, therefore, lock in your investment at high interest rates at these levels.


The fund has a high exit load. So in case you need your money before 30 months, you will lose out due to the exit load.
 

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