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Friday June 17, 2016
www.ft.lk
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What is Candor Money Market
(CMMF) fund?
The Candor Money Market Fund
is an Open ended Unit Trust that
invests in fixed income securities with
maturities up to 12 months. The objective of the Fund is to provide investors
with short ter m retur ns and liquidity
by investing in a portfolio of diversified
fixed income securities with tenors of
12 months or less.
What type of investments does
the Candor Money Market
Fund invest in?
CMMF invest in short-term fixed
income securities such as government bonds, treasury bills, commercial
paper, securitised trust certificates and
fixed deposits (of banks and finance
companies).
What does commercial paper
and securitisation mean?
Commercial paper is an unsecured, shor t-ter m debt instr ument issued by a corporation, typically
to meet that corporation’s short-ter m
liabilities. Maturities of commercial
paper are less than 12 months and the
Candor Money Market Fund usually
invest even shorter in ter ms of tenor,
such as 1-6 months. Corporations who
issue commercial paper can be finance
companies and other companies that
require short ter m funding. Rating of
the entity issuing the commercial paper
is very impor tant in this case since
these are unsecured instruments. At
Candor, we only consider commercial
paper of investment grade rating and
higher.
Securitisation is the practice of using
the cash flows from specified assets,
such as car leases or commercial bank
loans as backing for an issue of notes. A
securitised trust certificate is an asset
backed security that the fund invests in
for short durations. When purchasing
trust certificates, we consider the quality of the pool of cash flows as well as
the entity issuing the certificates.
What are the benefits of
investing CMMF?
Candor Money Market Fund is a
cash management fund. This is
an ideal investment vehicle for the purpose of managing your excess cash to
earn a competitive return while having
the flexibility to redeem your investment quickly. The Fund has the flexibility of a savings account and yet yields
much higher than an average savings,
call account or overnight REPO.
For companies who pay a higher tax
rate of 28% or even 17.5% there is an
attractive tax advantage by investing in
this fund since the fund only pays tax
at 10% (final tax for the fund) and the
returns are tax free in the hands of the
investor.
Like other mutual funds, money market fund units can be bought or sold at
any time. Some investors use money
market funds as a “parking place” for
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Candor Money Market Fund, an
attractive alternate solution for your
cash management and savings needs
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FT Info
For further information on the Fund and on how
to apply, please contact:
Fund Manager – Monica Wanigasekara: +94
112359110 or +94 777280490
Registrar for Fund – Uddeepa Peiris: +94
112359166 or +94 719320578
Email:[email protected]
Web: cam.candor-holdings.com
Candor Asset Management Chief Investment
OfficerRavi Amarasinghe, CFA
Candor Money Market Fund’s Fund Manager
Monica Wanigasekara
c a s h b e t we e n i nve s t m e n t s b e c a u s e
money market fund yields are competitive when compared to most savings
accounts. For institutions of all kinds—
businesses, nonprofit org anisations,
gover nment a g encies, and financial
institutions—money market funds are a
preferred vehicle for cash management
and liquidity.
Moreover, we do not charge a penalty
for early redemptions unlike in a bank
fixed de posit which may charge you
a penalty for redemptions before the
maturity date.
Who is managing the Candor
Money Market Fund?
The Candor Money Market Fund
is managed by a team of experienced fund managers at Candor Asset
Management (Pvt) Ltd, which is the
management company. Our fund managers have more than two decades of
combined experience in managing
funds and portfolios.
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Is Candor Asset Management a
Bank or Finance Company?
We a r e n e i t h e r. We a r e a
Securities
&
Exchange
Commission (SEC) regulated, independent Fund Manager who manages the
Candor Money Market Fund where the
Fund is held under a Trustee agreement
with Deutsche Bank, Colombo. As the
Trustee of the Fund, Deutsche Bank is
responsible for the safekeeping of the
assets of the Fund. Deutsche Bank is
also the Custodian for the Fund and as
such, all investments made by the Fund
Manager are held with Deutsche Bank.
Then why is it that the public
feels that it is safer to invest
with a fund management company
owned by a bank?
T h i s i s a m i s c o n c e p t i o n t h at
the public has, that a Fund
Management company should be affiliated to a Bank. The Fund Manager never
accepts deposits from clients and the
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Fund’s investments made on behalf of
investors are kept separate from the
assets of the Fund Management company. This is the same model used by
all unit trust companies, those owned
by banks as well as those not owned by
banks.
The assets of the Fund are held by a
Trustee, Deutsche Bank in this case.
Deutsche Bank is a reputed inter national bank. The Fund Manager only
invests the assets according to the mandate of the Fund, in order to provide a
good retur n for the unit holders. The
Fund Manager’s responsibility is to
study the fixed income market and the
underlying companies that issue various
instruments such as bank deposits, commercial papers, trust certificates and
invest in the best companies at good
rates.
What the investor has to be concerned
ab o u t i s wh e re t h e F u n d M a n a g e r
invests the monies- in which types of
instr uments and in which entities.
The Fund Managers of Candor Asset
Management monitor the ratings of the
instruments and companies that the
CMMF invests in and reallocate their
investments if a company, bank, or
instrument is downgraded.
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What is the safety that investors can get by investing in a
money market fund?
As the name of the product indic at e s, a u n i t t r u s t i s d e f i n e d
by a “Trust” framework. This legally
installs an inde pendent trustee who
holds the investments. The trustee safeguards the interest of all unit holders.
Our trustee is Deutsche Bank, which is
fundamentally a strong inter national
bank. Additionally, unit trusts are regulated by the Securities and Exchange
Commission of Sri Lanka. The SEC,
Trustee (Deutsche Bank) and the Fund
M a n a g e m e n t C o m p a ny e n s u re t h at
unit trusts funds as well as the Fund
Management company do not violate
investment regulations.
How does CMMF work?
The pool of investor contributions is divided into
equal units where each unit contains
the same proportion of assets in the
fund. Investors then share in the Fund’s
income and expenses. Units have a price
called a Net Asset Value (NAV). Each
contribution remitted to the unit trust,
via its Trustee, is used to purchase an
equivalent number of units. And each
unit represents an equal fraction of the
total value of the overall unit trust portfolio. This unit is very transparent as it
has a daily price which is published in a
national newspaper and on the website
of Candor Asset Management.
W hy is CMMF special when
compared with other money
markets funds in Sri Lanka?
It is special because of the flexibility of redemptions, flexible top
ups, dedicated relationship management
and because the CMMF has consistently
stayed within the top 5 Funds out of 18
Funds in the market since its launch in
terms of returns.
How can I realise my unit trust
profits?
The unit holder will earn a profit
at the time of redeeming his/her
units. Furthermore, the unit holder will
receive a dividend twice a year.
How do I know how much units
I own and how do I stay updated on my investment / returns?
You will receive a statement of
your unit holding in the Candor
M o n e y M a rke t F u n d eve r y q u a r t e r
and fund accounts twice a year. If you
require more frequent statements such
as monthly statements, you can request
for such statements from us in addition
to your return numbers.
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