Asset management company LIC Mutual Fund has applied for Money Market Fund, which is an open-ended debt scheme, which invests in money market instruments. The scheme has relatively low interest rate risk and moderate credit risk.
Money market mutual funds are used to manage short-term cash needs. Since they have an average maturity of one year, they are called money market instruments.
Money market instruments include commercial papers, commercial bills, treasury bills, corporate bonds, government securities, state development loans (SDLs) with no maturity period of up to one year, call or notice money, certificates of deposit, term bills, tripty repos and any are also included. Other similar instruments as specified by the Reserve Bank of India from time to time.
The benchmark for LIC MF Money Market Fund will be Nifty Money Market Index.
As per the Scheme Information Document (SID), investment in derivatives can be up to 50% of the net assets of the scheme. Investment in derivatives shall be for hedging, portfolio balancing and such other purposes as may be permitted from time to time.
According to the fund house, the scheme will not invest in American Depositary Receipts (ADRs), Global Depository Receipts (GDRs) or foreign securities. The scheme will also not cover short selling and investment in unrated debt instruments.
The minimum subscription amount for each plan will be 5,000 and thereafter in multiples of Rs.
In case of investors opting to switch from existing schemes of LIC Mutual Fund during the new fund offer period, the minimum amount is 5,000 and thereafter in multiples of Rs.
SBI Savings Fund, Aditya Birla Sun Life Money Manager Fund and HDFC Money Market Fund are the largest money market schemes in India with an asset value of Rs. 24,757 crore, 16,480 crore and 13,273 crores respectively.
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