ITI Mutual Fund has launched its overnight fund. The scheme ‘ITI Overnight Fund’ will open for subscription on October 9 and close on October 23.
With the launch of this overnight scheme, ITI MF will have two schemes in its debt product basket. In April, the fund house had launched ITI Liquid Fund.
ITI Overnight Fund is an open-ended debt scheme that will invest its entire corpus in debt and money market instruments maturing on or before the next business day.
In the fixed income mutual category, an overnight fund provides highest liquidity. These funds carry the least risk in terms of interest rate risk, mark to market risk and credit default risk.
George Heber Joseph and Milan Mody will manage ITI Overnight Fund.
Sharing the rationale for launching ITI Overnight Fund, George Heber Joseph, CEO and CIO of ITI MF said, “Overnight fund is the safest and least risky product among the entire MF product basket. It is an ideal vehicle for Institutional investors, corporates and High Net worth Individuals, who want to park their cash surpluses for short term time horizon ranging from 1 day to 1 month. The investors in the overnight fund would earn reasonable returns with high safety and low costs. As a fund house, on the fixed income side, we are focusing on products with short to medium term maturities and low duration. Hence the launch of ITI overnight fund.
Speaking about how ITI Overnight Fund will be different from other funds in the category, George said, “We will run the fund true to its mandate and offer excellent service and low costs to the investors.”
When asked about what kind of returns an investor should expect from this fund, George said that the product emphasizes highest safety and reasonable returns. “Typically, the returns will move in line with the prevailing overnight funding rate in the debt market,” he said.
The recent series of credit events have put debt funds into the spotlight for 'not so good' reasons. In such a scenario, to gain confidence of distributors and investors George believes that the focus should be on ‘return of investments’ more than ‘return on investments’.
“Our fund house investment philosophy ‘SQL” emphasises on ‘Safety of Investments’ (S), Quality of underlying business (Q) and Liquidity while considering debt instruments. Thus, we focus on giving reasonable returns with investments in quality papers rather than just trying to maximize returns. Investment decisions are based on bottom up and stringent credit research done internally. We overlay our internal credit assessment over ratings provided by external rating agencies. We have stringent credit quality filters, both at sector and issuer level, which are back tested and result oriented. The focus is on analyzing risks, both at business level and financial risks,” he said.
