Axis Mutual Fund has announced the launch of the new fund offer (NFO) of Axis Crisil IBX 50:50 Gilt Plus SDL September 2027 Index Fund. The NFO opens for subscription on February 8, 2023 and will close on February 21, 2023.
The open-ended target maturity index fund will invest in constituents of Crisil IBX 50:50 Gilt Plus SDL Index – September 2027 and will also track the same as the benchmark. Its portfolio will comprise Government securities (G-secs) and state development loans (SDLs) in a 50: 50 ratio.
The break-up of the weightage will be as follows.
The 50 per cent G-secs will be apportioned between 7.38 per cent G-sec 2027, and 6.79 per cent G-sec 2027. The remaining 50 per cent SDL will be apportioned among constituents of SDLs of Maharashtra, Tamil Nadu, Madhya Pradesh, Gujarat, Rajasthan, Andhra Pradesh, Uttar Pradesh, Karnataka, Telangana, Haryana, Punjab, Kerala, and Chhattisgarh.
Axis Mutual Fund said in a press statement that the fund offers a relatively high interest rate risk and relatively low credit risk.
The three salient features of the fund are its short maturity date – the index maturity date is September 30, 2027, its portfolio of G-secs and SDL in a 50:50 ratio, and the fact that index will be rebalanced quarterly.
Axis Mutual Fund announced in a statement that 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 – September 2027 before expenses, subject to tracking errors.
The minimum investment amount is Rs. 5,000 and in multiples of Re. 1 thereafter. The exit load is nil.
Axis Mutual Fund said that the scheme would be allocating 95-100 per cent of its underlying securities in debt instruments comprising Crisil IBX 50:50 Gilt Plus SDL Index–September 2027 and the remaining in debt and money market instruments, such as treasury bills and G-secs having a residual maturity up to one year, and tri-party repos and any other like instruments as specified by the Reserve Bank of India (RBI) from time to time.
According to Axis Mutual Fund, investors can use the systematic investment and withdrawal facilities to tailor their entry and exit in the fund to meet investment objectives.
Axis Mutual Fund said that the scheme is suitable for investors seeking an opportunity to invest in the yield curve as a result of the tightening of policy rates by the RBI. In addition, there is no bias in security selection as well. Lastly, it is a target maturity fund that offers benefits of indexation.
Chandresh Nigam, managing director and CEO, Axis AMC said: “The current yield curve presents material opportunities to the investor with a medium- to long-term investment horizon. Axis Crisil IBX 50:50 Gilt Plus SDL September 2027 Index fund gives an opportunity to investors to invest in a high quality portfolio with minimal default risk. The ‘held-to-maturity’ nature of target maturity strategies aims to minimise duration risk for investors who remain invested through the life of the fund.”