Namal Flexi Income Fund to accept investments from Feb 26

by Elmo Leonard

Sri Lanka's first closed ended fund, the Namal Flexi Income Fund will officially accept investments commencing February 26 and close March 9. It will issue 100 million units at Rs. 10 per unit (rupees 109 to a US dollar) and close earlier if oversubscribed.

While National Asset Management Ltd (NAMAL) intends to close the issue in the event of oversubscription to 200 million units, analysts anticipate early closure. Namal CEO S Jeyavarman said that in the event of early closure, the units will be honoured on a first-come-first-served-basis.

It's like an IPO, but it will have a fixed maturity period, in this instance, for a duration of two years.

The fund's investments will be exclusively in fixed income securities, in an attempt to beat the blues of anticipated increases in the rates of interest. "To tap interest rates and give it to the investor."

Namal's strategy is to market the product which will beat the depreciating rupee for its investors, and while inviting corporates to invest, would like broadbasing, the fund, mainly into the rural sector. Answering why the hinterland: "These people know only about investing in banks, which in the current context gives poor returns on the falling rupee," Jeyavarman said.

Investors could go through Email: [email protected], Website: www.namalfmc.com, make their applications through the web and pay to the nearest bank, director Tyrone de Silva said. The website will also give regular reports.

Deutsche Bank AG Colombo will act as trustee and custodian to the fund. Namal will be the manager and registrar to the fund.

Namal, in 1991 made history and controversy when it pioneered Sri Lanka's first unit fund, the National Equity Fund and winding queues of investors waiting for their money to be taken in.

Since, its portfolio includes: Namal Growth Fund, Namal Income Fund and Namal Money Market Fund. Namal is licensed by the Securities and Exchange Commission of Sri Lanka to operate and manage unit trusts and portfolios.

Traditionally, close ended funds do not permit capital withdrawals, during the funds fixed period of existence, the "income plus" scheme provides liquidity comfort to the investor, by permitting withdrawals up to a maximum of 50 percent of the initial capital invested, on a quarterly basis, or preannounced dates.

Namal manager - fixed income securities, Ian Ferdinands said that dividends from the funds are currently exempt from tax. This, added to the low fee structure, makes it an attractive investment opportunity for investors in the fixed income securities market.

All capital and income will be paid to the investor at the end of the two-year period. The Namal Flexi Income Fund will be scriptless, adding convenience to the investor.

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