key information memorandum cum application form - Rrfinance.com

Risk Management Strategies Risk Risk mitigants / management strategyInterest rate riskFall in the value of theportfolio due to upwardmovement of interestratesCredit riskIssuer’s inability to meetinterest and principalpayments on its debtobligationsLiquidity riskHigh impact costs forliquidation of securitiesheld in the portfolioAlthough this risk exists in a fixed incomeportfolio, the closed ended nature of the Schememitigates the risk as portfolio construction at thetime of inception leads to creation of a shortduration portfolio with securities whose maturitydate is in line with the maturity date of theScheme. Given the short duration of securities inthe portfolio, interest rate risk is anticipated to below.Credit risk management is an independent functionperformed by the Risk Management team. Theteam establishes and continuously monitors creditlimits for each issuer based on inputs from issuerfinancial statements, rating agencies etc. IssuerRisk Limits are imposed on a single issuer as well asan industrial group, for all the schemes. Issuer risklimits cover the quantum of exposure, maximumtenor and in some instances the type ofinstruments that can be purchased. Risk limits forissuers are assigned after discussion at an internalCredit Committee meeting. The endeavour is toconstruct a portfolio with high credit quality.In a closed ended product, liquidity risk on accountof underlying securities’ market liquidity does notexist as intermediate liquidity is not required.Liquidity access is done through contractualmaturity of the security, which is in line with theterm of the closed ended Scheme.Concentration riskConcentrated investmentin single security or singleissuerWe have internal fund manager guidelines formaximum exposure to a single issuer and alsoconcentration limits on account of large holdingsto avoid undue concentration in portfolio.Event riskPrice risk due to companyor sector specific eventThe endeavour is to invest in securities of issuers,which have high balance sheet strength in theinvestment horizon to eliminate single companyrisk.Plans available under theSchemesRegular PlanDirect PlanOptions available under theplans under the SchemesGrowth*Dividend Payout*default OptionMaturity DateThe Schemes will be fully redeemed at the end of their respective tenure.DSP BlackRock FTP – Series 21 - 18M will mature on August 26, 2014.If such day is not a Business Day, the immediately succeeding Business Day willbe considered as the maturity date. On the maturity date, all Units under theSchemes will be compulsorily, and without any further act by the Unit Holders,redeemed at the Applicable NAV of that day.Minimum Application Amount/Number of UnitsRs. 5,000/- and multiples of Re. 1/- thereafterBenchmark IndexFor Schemes having maturity of upto36 months:CRISIL Short Term Bond Fund Index.5