The Medium Term Plan seeks to further segment the burgeoning Income Fund market by targeting investors with an investment time horizon of between 4-12 months.

Speaking at the occasion of the launch Naval Bir Kumar, Managing Director, Standard Chartered Mutual Fund remarked "At Standard Chartered Mutual Fund we have always offered our investors innovative schemes to suite their various investment needs. Our Medium Term Plan is yet another first that provides the right balance between returns and risk. It can be viewed either as an aggressive short term fund or a conservative income fund depending on the investors perspective."

"We have launched the Medium Term Plan at a time when interest rates across most fixed income products have hit an all time low with the 10-year benchmark free falling from 9-11% in 2001 to sub 6% levels now. The launch of the fund thus assumes significance given that most market participants anticipate interest rates to be range bound." says Rajiv Anand, Head-Investments, Standard Chartered Mutual Fund.

The flat interest rate environment has meant that long term funds have had to increase their duration by investing a greater part of the portfolio in longer maturing securities. Duration, measured in number of time periods, is a term that is widely used as an indicator of the interest rate risk that a fund carries. This in turn has meant increased volatility and thus increased risk in the short term.

While Cash funds typically manage a duration of less than 6 months, the duration for Short term plans ranges between 1-2 years and that for long term funds are now between 6-7 years. The medium term seeks to exploit the huge gap between long term and short term by attempting to maintain a duration of between 2-4 years.

Income funds in the recent past have been attempting to structure their products in line with the requirements of the Fixed Deposit investor, through the launch of innovative fixed income products that perform best for a pre-specified time horizon, akin to the various maturity periods of FDs. All this at comparable safety whilst offering higher liquidity. This has led to the segmentation of income fund market with the hugely popular Cash/Liquid funds occupying the extreme short end spectrum for the 7- 30 days investor and the once ubiquitous income funds positioned for long term investors with a time horizon of a year and more.

Standard Chartered Mutual Fund was the first to carve out a niche within this time band with the launch of the Short term plan in the Grindlays Super Saver Income Fund in December 2001. Since then Short term funds, targeted at investors with a time horizon of between 2- 5 months, have been a roaring hit and today account for more than 12% of the MF assets.

Standard Chartered Mutual Fund is sponsored by Standard Chartered Bank, UK and is among the fastest growing mutual funds. It is the only domestic fund house that is focused on debt markets. Within a short time span of under three years it is among the leading Mutual Funds today with current assets being in excess of Rs 5500 crore in its six schemes.

Standard Chartered Mutual Fund is credited with several firsts including the introduction of the Short term category, redemptions the very next business day for all its income funds and the launch of a dynamic asset allocation fund- the Grindlays Dynamic Bond Fund.