With the economic growth slated above 8 per cent annually, fresh investments in infrastructure development and booming stock markets, India can definitely be counted among the so called 'tiger' economies that are making their mark.
Incidentally, TIGER also happens to be the name of a new scheme launched by DSP Merrill Lynch Mutual Fund that aspires to take advantage of the new optimism among the Indian investor class.
Innovatively named DSP Merrill Lynch India TIGER (the infrastructure growth and economic reforms) Fund, the scheme opens for subscription from April 27, 2004, and closes on May 20, 2004.
The fund is an open-ended diversified equity scheme and seeks to generate long-term capital appreciation for its investors. To be managed by Anup Maheshwari, the scheme is one more addition to the growing stable of DSP Merrill Lynch MF, which currently has 11 schemes.
According to the offer document, the scheme will aim to invest in equity and equity-related securities of corporates whose fundamentals and future growth could be influenced by the ongoing process of economic reforms and infrastructure development.
The fund may also invest a certain portion of its corpus in debt and money market securities in order to meet liquidity requirements from time to time.
Approximately 90 per cent of the portfolio of the scheme will be invested in equity while the rest will be invested in debt and money market securities. Keeping the unpredictability of the stock markets, the fund has retained the option of reducing its equity investments up to a minimum of 65 per cent, even if only for a short-term.
The scheme also has the option of investing up to 25 per cent in ADRs and GDRs of Indian companies apart from foreign securities.
According to the fund, such avenues offer new investment and portfolio diversification opportunities in multi-market and -currency products. The performance of TIGER will be compared with the BSE 100 Index, which is adopted as the benchmark index for the scheme.
Banking on economic growth
The fund is betting on the positive impact of the ongoing process of economic reforms on the country's GDP. Structural changes in various sectors and companies, improving private investments, de-regulation of pricing and government-aided programmes are set to accelerate the pace of investments, attracting more investment capital.
According to the fund, the increase in capital investment is likely to result in creation and unlocking of value out of existing investments. Such value creation could be reflected through increased corporate profits and better market capitalisation, says the fund.
With regard to economic reforms, the fund will focus on companies and sectors which are likely to be affected by policy changes in ownership patterns -- divestment, increase in FDI limits, opening of business to private sector, deregulation of price control and government funding programmes for upgradation of specific sectors.
Apart from sectors, which are set to benefit from policy changes, the scheme also hopes to bank on industries, which are set to benefit from the ongoing infrastructure development like the golden quadrilateral.
The sectors that the scheme will broadly be focusing on would be power, banking and finance, telecom, oil and gas, pharmaceuticals, media, fertilisers, travel and tourism, cement, engineering, metals and auto.
The fund plans to adopt a combination of top-down and bottom-up stock selection approaches. From the former perspective, the focus would be on key policy changes, infrastructure spending, economic trends and a sector-wise impact assessment.
From a bottom-up perspective, the focus would be on corporate profitability and the impact of policy changes and infrastructure spending at a micro level.
Load structure
An entry load of 2 per cent will be charged for all purchases below Rs 5 crore (Rs 50 million) during the initial offer period and beyond. However, there will be no entry load for purchases of Rs 5 crore and above.
The corpus of the scheme will be divided into units having an initial value of Rs 10 each. The fund seeks to collect a minimum subscription amount of Rs 1 crore in the initial offer. The minimum amount of application is fixed at Rs 1,000 and in multiples of Rs 1 thereafter.
Investors in the scheme can choose between growth option (option A) for capital appreciation and dividend option (option B) for regular income. The dividend option have two sub-divisions - pay-out dividend option and reinvest dividend option.
Facilities
The scheme also offers investors several facilities like systematic investment plan, systematic plan of investment for corporate employees, systematic withdrawal plan and systematic transfer plan.
SIP allows investors to invest a fixed amount of rupees every month or quarter by purchasing additional units of the scheme at the prevailing purchase price. The unit holders who have a balance of at least Rs 1,000 in the scheme can invest a minimum of Rs 500 and in multiples of Rs 100 thereafter on a monthly or quarterly basis under the facility.
SPICE, on the other hand, is aimed at corporate employees where the company for which a person works will deduct an instructed amount from his salary instead of him giving post-dated cheques. As per SWP, a unit holder will receive regular monthly payments from his/her account.
The minimum amount which the unit holder can withdraw is Rs 200 and in multiples of Rs 100 thereafter. Apart from these, unit holders of the scheme will also have the option to switch their investment in the scheme to any other scheme of DSP Merrill MF. Under STP, investors can choose to switch part of their investments on a monthly or quarterly basis from one scheme to another.
While the fund is fundamentally not much different from the slew of diversified schemes that currently dot the market, the fact that it purports to invest in sectors and companies which are directly impacted by economic policy changes and infrastructure investments should ensure healthy returns in the long run, provided of course, the Indian tiger continues to roar.Powered by 
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