Monarch Mutual Fund set to enter MF space with maiden overnight fund; files draft with Sebi

According to the draft filed with the market regulator, Monarch Overnight Fund will be an open-ended debt scheme investing in overnight securities with a relatively low-interest rate risk and relatively low credit risk.

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The objective of the scheme will be to seek to generate returns commensurate with low risk and providing high level of liquidity, through investments made primarily in overnight securities having maturity of one business day.

The performance of the scheme will be benchmarked to CRISIL Liquid Overnight Index and will be managed by Sanjay Motta.

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The minimum application amount for lumpsum investment will be Rs 5,000 and in multiple of Re 1 thereafter. The minimum application amount for SIP investment will be Rs 1,000 and in multiples of Re 1 thereafter with minimum six installments.
The fund will invest upto 100% in debt and money market instruments maturing on or before next business day. Overnight funds can deploy, not exceeding, 5% of the net assets of the scheme in G-secs and/or T-bills with a residual maturity of up to 30 days for the purpose of placing the same as margin and collateral for certain transactions.

Portfolio rebalancing due to short term defensive consideration

Subject to the SEBI (Mutual Funds) Regulations, the asset allocation pattern outlined above may be modified from time to time based on prevailing market conditions, available market opportunities, applicable regulatory requirements, as well as political and economic developments.

Portfolio rebalancing in case of passive breaches

Investment strategy and pattern may be deviated from time to time, provided such modification is in accordance with the Scheme(s) objective and Regulations as amended from time to time, the intent being to protect the Net Asset Value of the scheme and unitholders’ interests. In case of any deviation (initial as well as subsequent deviation) in investment pattern, the AMC will achieve a normal asset allocation pattern in a maximum period of 7 days.

In case deviation in investment pattern is not rebalanced within the period indicated above then justification for such delay in rebalancing of portfolio shall be placed before the investment committee and the reasons for the same shall be recorded in writing.

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The fund will be suitable for investors who are seeking regular income over a short term that may be in line with the overnight call rates and want to generate returns by investing in debt and money market instruments with overnight maturity.

The principal invested in the fund and the respective benchmark will be at “low risk” according to the riskometer of the fund and benchmark.

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