Axis Mutual Fund has announced the launch of their new fund offer (NFO) – Axis CRISIL IBX 50:50 Gilt Plus SDL June 2028 Index Fund. It is an open-ended target maturity index fund investing in constituents of CRISIL IBX 50:50 Gilt Plus SDL Index – June 2028; a relatively high interest rate risk and relatively low credit risk.
The new fund will track the CRISIL IBX 50:50 Gilt Plus SDL Index – June 2028. The fund managers for the scheme are Kaustubh Sule and Hardik Shah. The minimum investment amount is Rs 5,000 and in multiples of Rs 1/- thereafter and there is no applicable exit load.
The NFO opens for subscription from January 05, 2023 to January 16, 2023.
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Axis CRISIL IBX 50:50 Gilt Plus SDL June 2028 Index Fund
The investment objective of the scheme is to provide investment returns corresponding to the total returns of the securities as represented by the CRISIL IBX 50:50 Gilt Plus SDL Index – June 2028 before expenses, subject to tracking errors. However, there can be no assurance or guarantee that the investment objective of the scheme will be achieved. The open ended nature of such a fund means that investors can use systematic investment and withdrawal facilities to tailor entry and exit in the fund to meet investor objectives. Further, these funds do not have lock-ins and hence provide liquidity to investors, should they wish to redeem mid-term without any hassles.
Fund Composition
The scheme would be allocating 95% to 100% of its underlying securities in Debt Instruments comprising CRISIL IBX 50:50 Gilt Plus SDL Index – June 2028 (in the same weightage as in the Index) and the remaining in Debt and Money Market instruments (only treasury bills and government securities having a residual maturity up to one year). The scheme will follow buy and hold investment strategy in which debt instruments by G-Sec & state government securities will be held till maturity unless sold for meeting redemptions/rebalancing.
Why invest in a portfolio of G-Secs & SDLs?
Axis CRISIL IBX 50:50 Gilt Plus SDL June 2028 Index fund gives an opportunity to investors to invest in a high quality portfolio with minimal default risk. Government securities and SDLs are one of the most liquid instruments traded in the Indian debt market. The RBI has raised policy rates by ~225 bps between Apr ’22 and Dec ’22 to combat rising inflation. This has resulted in a sharp retracement across the short end of the curve (1-3 Year segment) even as the long end of the curve remains anchored. Today, the flat yield curve offers opportunities for investors in the 5-year segment from a risk reward standpoint. Hence, the Axis CRISIL IBX 50:50 Gilt Plus SDL June 2028 Index fund offers an ideal investment opportunity for investors looking to lock in rates over the 5-year investment opportunity.
Top features of the fund include:
* Expected Yields: As inflation comes within RBI’s tolerance band, the tightening stance of RBI policy seems to be nearing the end. The current yields on a prevailing 5-year similar portfolio hover around 7.50%. (As of 15th December 2022).
* Low Cost Passive Investment: A hassle-free solution for investors looking for a low cost fixed income product.
* No Bias in Security Selection: As the fund is passively managed and invests in the constituents of CRISIL IBX 50:50 Gilt Plus SDL June 2028 Index, there is no bias in security selection.
* Simple and Easy: Target maturity and high quality G-Sec and SDL portfolio with the benefit of indexation.
Commenting on the launch of the NFO, Chandresh Nigam, MD & CEO, Axis AMC, said, “The current yield curve presents material opportunities to the investor with a medium to long term investment horizon. As a fund house that believes in ‘responsible investing’, we believe that the Axis CRISIL IBX 50:50 Gilt Plus SDL June 2028 Index Fund will be a notable add-on to the investor’s passive debt portfolio. As a passive fund, the product aims to replicate a designated index created by reputed index providers. Furthermore, the ‘held to maturity’ nature of target maturity strategies aims to minimize duration risk for investors who remain invested through the life of the fund.”
