Union KBC Trigger Fund - Series 1

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There are no tax benefits, under equity linked savings scheme (ELSS), for this fund's investors

FEATURES & NFO PERIOD:

 

 The Union KBC Trigger Fund-Series 1 (UKTFS1) is a three-year tenured close-ended equity fund, which will open for public subscription on October 14 and close on October 25.

Thereafter, being a close-ended fund, it does not reopen for continuous purchases and redemptions.

There are no tax benefits, under equity linked savings scheme (ELSS), for this fund's investors.

UNIQUE FEATURES:

 

As the word `trigger' in the name suggests UKTFS1 will prematurely close the fund if the net asset value of the fund touches Rs 13 (face value of a unit being Rs 10), anytime from allotment date to its three-year later maturity date in October 2016. In other words, a 30 per cent appreciation before maturity date will trigger a premature end to the close-ended fund. The exact premature redemption date, in the event of Rs 13 NAV getting triggered, will not be the exact trigger date, but will be the 10th working day from it. This is to enable the fund manager to liquidate all the holdings.

ASSET ALLOCATION & BENCHMARK:

 

UKT FS1's scheme informa tion document states it will invest 80-100 per cent in equities, a pre dominant part of which will be in BSE 200 index constituent-stocks. It can also deploy up to 20 per cent in debt and money market securities. Benchmark index will be BSE 200.

Though UKTFS1 is a first-of-its-kind equity fund, the value-add being offered, that of a 30 per cent trigger is not great in the sense of offering a compelling reason for an investor in putting his money in it.

Most online equity trading portals and mutual fund transaction portals offer their clients the feature of client-fixed price alerts. These alerts enable every investor to sell his holdings if he thinks his desired objective is fulfilled, and these can vary from investor to investor as per the investors' chosen preferences. There is nothing sacrosanct in a 30 per cent trigger, which UKTFS1 is offering. Moreover, since it is close-ended, a falling NAV will not enable investors to opt out before the three-year period is over. But if an online fund transaction portal gives you alerts or even trigger-based trade facility, then you can be invested in an openended equity fund and opt out both ways, when the NAV is rising or falling. With respect to past performance track record of the AMC, its sole open-ended diversified Union KBC equity fund has not fared greatly.

As of October 9, the scheme ranked 26th, and 27th, in one-year, and two-year, returns among 58 diversified open-ended large-cap equity funds.

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