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Pramerica Short Term Floating Rate Fund
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Market Outlook
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Liquidity in the system has remained tight during recent months. Liquidity crunch
has resulted in short term interest rates trading closer to 9.75% to 10.00% (3months
Certificate of Deposit Rates).
Responding to the liquidity crunch, the Reserve Bank of India (RBI) has recently
announced a Cash Reserve Ratio (CRR) cut of 50 bps releasing about
` 32,000 crores
in the system. Going forward also, further action of CRR cut or Open Market Operation
(OMO) by the RBI cannot be ruled out. Given this scenario, current money market
yields are looking very attractive.
Portfolio constructed at current money market yields is likely to remain attractive
proposition for next three to six months.
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Pramerica Short Term Floating Rate Fund (An open ended income scheme)
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Floating rate and money market instruments have the ability to re-price returns
within a short term and hence replicate returns from money market segment. Pramerica
Short Term Floating Rate Fund is ideal as a short term investment avenue, as the
Scheme is positioned between a liquid fund and a short term fund with respect to
the risk return spectrum.
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Why invest in Pramerica Short Term Floating Rate Fund?
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Pramerica Short Term Floating Rate Fund can benefit from conducive interest rate
environment and presents an opportunity to create a fresh, risk optimized portfolio
at current high yield scenario in shorter maturity instruments. The Scheme offers
benefit of lower expenses to retail investors due to uniform expense charge to all
category of investors. Since there is no entry or exit load, the Scheme offers high
liquidity. Pramerica Short Term Floating Rate Fund is tax efficient, as dividend
distributed by the scheme will be tax free in the hands of the investor.
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Who should invest?
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Floating rate and money market instruments have the ability to re-price returns
within a short term and hence replicate returns from money market segment. Thus,
Pramerica Short Term Floating Rate Fund is suitable for:
- Investors who are seeking to invest in a portfolio predominantly investing in shorter
maturity instruments, with residual maturity of up to 400 days.
- Investors with moderate risk appetite for an investment horizon of six months and
above.
- Conservative investors with investment horizon of three months and above.
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About Pramerica Short Term Floating Rate Fund
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Investment Objective - The objective of the Scheme is to generate regular
income through investment in a portfolio comprising primarily in short maturity
floating rate debt/money market instruments. However, there is no assurance that
the investment objective of the Scheme will be realized and the Scheme does not
assure or guarantee any returns
Investment Strategy - Portfolio management and investment decisions will
be based on following:
- In-house assessment of various macro factors such as interest rates, economic growth,
inflation, credit pick-up, liquidity etc
- Active review and monitoring of portfolios, as well as markets for necessary portfolio
rebalancing
- Efficient portfolio construction to manage interest rate risk across different asset
classes and duration buckets and to optimize risk-adjusted returns
Credit portfolio management primarily guided by external credit ratings assigned
by any of the recognized credit rating agency
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Asset Allocation
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Instruments
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Indicative Asset Allocation (%)
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Risk Profile
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Maximum
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Minimum
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(Low/Medium/High)
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Floating Rate debt securities with residual maturity of less than 400 days (including
fixed rate debt instruments swapped for floating rate returns) and money market
instruments.*
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65
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100
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Low to Medium
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Floating Rate and other debt securities with residual maturity between 400 days
and upto 3 years(including fixed rate debt instruments swapped for floating rate
returns)
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0
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35
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Low to Medium
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Floating rate instruments include money market instruments, i.e. fixed rate instruments
with maturity upto 364 days as investments in such instruments gets re-priced within
a year just like floating rate instruments where coupons are reset periodically.
* The fund manager would invest in money market instruments, as and when deemed
appropriate & necessary, depending upon interest rate scenario and relative benefit
of floating rate instruments.
Presently, the scheme does not intend to invest in securitized debt and overseas/foreign
securities. The scheme retains the flexibility to invest across all the securities
in the debt and money markets instruments within the abovementioned asset allocation.
The portfolio may hold cash depending on the market outlook.
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Key Features
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Benchmark Index
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CRISIL Short Term Bond Fund Index
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Fund Manager
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Mr. Mahendra Jajoo
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Minimum application amount
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Minimum of ` 5,000/- and in multiples
of Re.1/- thereafter
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Minimum additional amount
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Minimum of ` 100/- and in multiples
of ` 1/-thereafter
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Options
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- Growth Option; and
- Dividend Option, with two facilities, namely :
- Dividend Reinvestment Plan
(Daily, Weekly and Monthly frequency)
- Dividend Transfer Plan
(Daily, Weekly and Monthly frequency)
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Special Products
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Systematic Investment Plan, Systematic Transfer Plan & Systematic Withdrawal Plan
– Not available during NFO. Available for investments post NFO period
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Important Disclosures
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- Name of the Scheme: Pramerica Short Term
Floating Rate Fund(An open ended Income Scheme). Investment
Objective : To generate regular income through investment in a portfolio
comprising primarily in short maturity floating rate debt/money market instruments.
However, there is no assurance that the investment objective of the Scheme will
be realized and the Scheme does not guarantee any returns.
Asset Allocation: Floating Rate debt securities with residual maturity
of less than 400 days (including fixed rate debt instruments swapped for floating
rate returns) and money market instruments – 65% -100% & Floating rate and other
debt securities with residual maturity between 400 days and upto 3 years (including
fixed rate debt instruments swapped for floating rate returns) – 0% -35%.
Terms of issue and sale and redemption of units: Issue of units of Rs
1000 each for cash during the New Fund Offer and at NAV based prices thereafter.
The scheme offers sale and redemption facility on all business days during the ongoing
offer. NAV of the Scheme will be calculated and disclosed at the close of every
Business Day. Load Structure: Entry Load:
Nil, Exit Load: NIL. Recurring Expenses:
Recurring expenses including the investment management and advisory fee that can
be charged to the Scheme shall be subject to a percentage limit of average daily
net assets @ 2.25% for the first Rs 100 crore; @ 2.00 %, next `Rs 300 crore; @1.75
% on the next Rs 300 Crores; and @ 1.50% on the balance.
NFO expenses: To be fully borne by AMC/ Sponsor. Copy of SID/SAI and
Key Information Memorandum (KIM) can be obtained from any of our Investor Services
Centers as well as from our website: www.pramericamf.com
- Risk Factors: All mutual funds and securities investments
are subject to market risks and there can be no assurance that the objective of
the Scheme will be achieved. As with any investment in securities, the NAV of the
units under the Scheme may go up or down depending upon the factors and forces affecting
the securities markets. Pramerica Short Term Floating Rate Fund is only the name
of the scheme and does not in any manner indicate either the quality of the Scheme,
its future prospects and returns. Performance of the Sponsor has no bearing
on the expected performance of the mutual fund or any of its schemes. Past performance
of the Sponsor and their Affiliates/AMC/Mutual Fund & its Scheme(s) does not indicate
the future performance of the Scheme and may not necessarily provide a basis of
comparison with other investments. Investment in Mutual Fund Units involves investment
risks such as trading volumes, settlement risk, liquidity risk, default risk including
the possible loss of principal. As the price / value / interest rates of the securities
in which the scheme invests fluctuate, the value of your investment in the Scheme
may go up or down. Investors are not being offered any guaranteed / assured returns
under any scheme of Pramerica Mutual Fund. FOR SCHEME-SPECIFIC
RISK FACTORS & TAX IMPLICATIONS, PLEASE REFER TO THE SCHEME INFORMATION DOCUMENT.
- Statutory Details: Pramerica Mutual Fund
is set up as a Trust under the Indian Trusts Act, 1882 and registered with SEBI.
Sponsor: Prudential Financial, Inc. (PFI) of the United States of America [liability
restricted to initial contribution of Rs 1 Lac towards the corpus of the Mutual
Fund]. [Pramerica is the brand name used by PFI and its affiliates in select countries
outside the United States. Prudential Financial, Inc. of the United States is not
affiliated in any manner with Prudential plc, a company incorporated in the United
Kingdom] Trustee: Pramerica Trustees Private Limited. Investment Manager: Pramerica
Asset Managers Private Limited.
- This document has been prepared by Pramerica Asset Managers Private Limited (the
AMC) on the basis of publicly available information, internally developed data and
other third party sources believed to be reliable. However, no assurances are provided
regarding the reliability of such information. THERE
CAN BE NO ASSURANCE THAT ANY FORECAST MADE HEREIN WILL BE ACTUALLY REALIZED. The
information contained herein is current as of the date of issuance (or such earlier
date as referenced herein) and is subject to change without notice. The AMC has
no obligation to update any or all of such information; nor does the AMC make any
express or implied warranties or representations as to its completeness or accuracy.
The AMC is neither a legal nor tax advisor. The information contained herein does
not constitute investment or tax advice. This document does not take into account
individual client circumstances, objectives or needs. No determination has been
made regarding the suitability of any securities, financial instruments or strategies
for particular clients or prospects. The information contained herein is provided
on the basis of and subject to the explanations, caveats and warnings set out elsewhere
herein. In view of the individual nature of the tax implications, each investor
is advised to consult his or her own professional tax advisor and/or consultant,
for advice concerning the investor’s particular situation with respect to the specific
tax and other implications arising out of his/her/its participation in the Scheme
& suitability of the Scheme for the investor’s objective & needs. This document
is not intended for distribution to or use by any person in any jurisdiction where
such distribution would be contrary to local law or regulation.
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MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS.
PLEASE READ SCHEME INFORMATION DOCUMENT & STATEMENT OF ADDITIONAL INFORMATION CAREFULLY
BEFORE INVESTING.
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