ITI Mutual Fund has filed offer documents with SEBI, seeking the regulatory body’s approval for its first two schemes – ITI Arbitrage Fund and ITI Long Term Equity Fund. The fund house, formerly known as Fortune Financial Services India Limited, had received a certificate of registration from SEBI in May 2018.
ITI Arbitrage Fund will be an open-ended equity that will invest mainly in arbitrage opportunities. Arbitrage is a strategy that takes advantage of the price difference between cash and futures value of a commodity or stock or index. Under normal circumstances, the scheme will invest chiefly in equity-related arbitrage opportunities (65 to 100 percent). Investment in debt instruments will be capped at 35 percent. Owing to this asset allocation, an arbitrage fund is taxed as an equity fund, while having a relatively lower risk profile of a debt fund.
The Nifty 50 Arbitrage Index will be the benchmark for the ITI Arbitrage Fund. The benchmark index has one year returns of 4.46 percent and five year returns of 6.33 percent as of December 31, 2018.
The other scheme, which is ITI Long Term Equity Fund, is a tax-saver equity scheme with a lock-in period of three years. Equity linked saving schemes (ELSS) are used by investors to claim a tax benefit for up to Rs. 1.5 lakhs in a financial year.
Under normal circumstances, the ELSS Fund aims to predominantly invest in equity and equity-related instruments (80 to 100 percent). Investment in short-term debt and money market instruments will be capped at 20 percent.
ITI Long Term Equity Fund will be benchmarked against the Nifty 500 Total Returns Index. The Nifty 500 Index has a broad universe to choose from and does not have restrictions in terms of company size or type. This is also the benchmark index for other existing ELSS schemes by ICICI Prudential Mutual Fund, Edelweiss and the recently launched long term equity scheme by Sundaram Mutual Fund.
|Index Name||1-yr TRI (%)||5-yr TRI (%)|
|Nifty 500 TRI||-2.14||14.61|
*Returns data as on December 31, 2018
The ITI Arbitrage Fund will be co-managed by George Heber Joseph and Milan Mody. Joseph joined the fund house in November 2018 as the CEO and has previously worked at ICICI Prudential AMC. The ITI Long Term Equity Fund will be co-managed by Joseph and Pradeep Gokhale. Gokhale joined ITI from Tata AMC in November 2018.