News: Merrill taps Indian cash for overseas funds

(TT 26/09/2006) Mumbai - DSP Merrill Lynch plans to tap investors in India who will be offered investment opportunities abroad. Merrill will kick off with a feeder fund — for which it has filed a prospectus with Sebi — that will plug into the Merrill Lynch Gold Fund abroad.

The scheme is one of the first proposed by DSP Merrill Lynch Fund Managers to tap local money for overseas funds.

“We aim to be among the top five mutual fund houses in terms of assets under management over the next 18 months and have put together an aggressive business plan to achieve that,” said S. Naganath, president and chief investment officer, DSP Merrill Lynch Fund Managers.

At the end of August, the fund house ranked 12th with a corpus of Rs 10,980 crore, according to the figures of the Association of Mutual Funds of India (Amfi).

“We plan to offer innovative schemes to our investors and also have some overseas funds on the anvil. We have already submitted the draft prospectus for the world gold fund with the regulator,” said Naganath.

According to the document filed with the Securities and Exchange Board of India (Sebi), the scheme will invest in Merrill Lynch International Investment Funds — World Gold Fund, which invests primarily in the equity of companies whose predominant economic activity is gold mining.

“This will be a feeder fund which will invest in the Merrill Lynch Gold Fund abroad. The scheme does not hold any physical gold or metal but invest in equities of companies worldwide whose main business activity is gold mining," explained Naganath.

According to the prospectus, the parent scheme may also invest in securities of companies whose predominant economic activity is other precious metal or mineral and base metal or mineral mining.

“However, there is an individual fund house cap of $100 million on the amount raised in overseas schemes. As and when the limit is relaxed, we will have the flexibility to launch more such funds since Merrill Lynch has many such attractive funds in the global market,” added Naganath.

The fund house today launched the DSP Merrill Lynch Small and Mid Cap Fund after a hiatus of over two years.