These factors can lead to short term fluctuations in the net asset value of a gilt fund. It must, however, be emphasised that in the absence of any credit risk, holding these instruments till maturity mitigates this risk. Investors seeking capital appreciation only can chose the funds growth option. For those who require income distribution there is the dividend option. The scheme is however, liable to pay dividend distribution tax.
Investors can reinvest dividends received by opting for the fund s dividend reinvestment facility.
The scheme is currently being run on a no-load basis. There is thus, no entry or exit load. Rs 5,000 will be invested. As the fund is being launched on a no-load basis the AMC is entitled to levy an additional investment and advisory fee not exceeding 1 per cent of the average weekly net assets outstanding. With its strong track record of managing debt schemes, the fund should be able to manage this pure gilt offering.