The benchmark would be average of 6 months Kibor rates quoted during the period. This was stated by Head of NITL Manzoor Ahmad here on Thursday while giving a presentation on NIT-Income Fund adding that NIT is managing five funds with net assets worth Rs 87 billion, catering for around 56,000 unit holders.
Manzoor said NITL has been assigned a rating of AM2, which reflects that the asset manager has very strong capacity to manage risks inherent in asset management and meets very high investment management industry standards and benchmarks. He said the Income Fund is a collective investment scheme that invests in Fixed Income Securities/Instruments.
Investments are made in investment-grade debt securities and in bank deposits. The fund yields a higher return as compared to money market mutual funds with moderate risk. NIT Government Bond (NIT GBF) launched on November 18, 2009 received an overwhelming response from both institutional and individual investors with a combined Pre-IPO & IPO subscription of over Rs 2.5 billion.
The fund size has now grown to Rs 3.2 million. He said NITL are the core investor of the NIT Income Fund which has invested Rs 100 million of which Rs 50 million will remain invested for a period of at least two years. He said the Central Depository Company of Pakistan is the trustee to the Fund, while A F Ferguson & Co Chartered Accountants is the first auditor. Similarly, government of Pakistan has been issued the securities.
NIT Income Fund has two classes ie 'Class A' would represent growth units and 'Class B' would represent income units. The unit value grows in line with the growth in the NAV, and the unit holders will have the option to receive distribution income in the form of cash or reinvestment in units. The unit holders will choose one of the following two options.
He said the unit holders, based on their own consent and with prior intimation to the management company, may exercise the option of redeeming a certain number of units for meeting their liquidity requirement at regular intervals (ie monthly, quarterly, semi annually or annually).
NIT Sub Classes of Income Units are Flexible Income Units and Fixed Income Units, the Flexible Income Unit Holder will, at the time of purchase or beginning of a regular interval, authorise the management company to redeem and pay the growth part of NAV at regular intervals keeping his original holding intact.
The Fixed Income Unit Holders will, at the time of purchase or beginning of a regular interval, specify a fixed cash amount required by them at regular intervals and authorise the management company to redeem (at the prevailing NAV) such number of units from their holding that in rupee terms is equivalent to the specified fixed amount required at the end of every regular interval. Initial minimum investment in the fund will be as Growth Units, Rs 5000 and Income Units, Rs 100,000.
Subsequent investment: Growth Units, Rs 1000; Income Units, Rs 2500. Benefits of Investment in NITIF are diversified ie, investment in high quality fixed income securities; attractive returns; moderate risk; professional and experienced management; tax efficient; Zakat exemptions as per rules; easy encashment; investment starts with a small amount of Rs 5000; while qualify as collateral for availing bank financing. NITIF Sale Load and Fee Structure are as under, no Front/Back End would be charged to pre IPO Investors; and IPO Investors, however, subsequent to IPO following sales load payables by investors would be as follows:
Front endload: 1 percent of NAV while back end load - nil. Management fee of the fund is 1.25 percent per annum while risk factors are: Credit risk; interest rate risk; liquidity risk and reinvestment risk.
Manzoor said NIT-IF is suitable for those investors who wish to invest their funds in a product offering competitive stream of return at moderate risk. Procedure to invest in NIT-IF is very simple. Just fill in the forms and submit the same along with payment instrument drawn in favour of CDC-Trustee NIT Income Fund and necessary documents to any of NIT branch.