Bandhan Mutual Fund on March 14, 2023 confirmed that the recently-launched US Debt (ETF) Fund has been renamed as the Bandhan US Treasury Bond 0-1 Year Fund of Fund.
The name change comes in the wake of Bandhan Mutual Fund recently announcing the change of name for all its schemes following the rebranding of the fund house.
Bandhan Mutual Fund said in a statement that the open-ended fund of fund (FoF) will invest in units and/or shares of overseas index funds and/or exchange-traded funds (ETFs), and track an index with the US treasury securities in the 0-1 year maturity range as its constituents.
It will invest in an overseas fund with exposure to 0-1 year US treasuries, currently through the JPMorgan BetaBuilders US Treasury Bond 0-1 year UCITS ETF. The fund will be benchmarked against the ICE 0-1 Year US Treasury Securities Index, it said.
The new fund offer (NFO) opened on March 10, 2023, and will close on March 23, 2023.
Bandhan Mutual Fund said the scheme will offer Indian investors an opportunity to diversify into global markets through the debt route. The fund will provide investors with a convenient route to create a dollar asset that benefits from the relatively high quality, reasonable safety, and current high yield of US Treasuries.
“Amidst a probable slowdown across most economies globally, with a risk-off sentiment, investors globally prefer the US treasuries, which are considered the highest quality asset class (Fitch AAA rated vs India sovereign rating of BBB-). This highest quality asset class now also offers relatively attractive yields, with US treasuries maturing within 1 year now at about 5 per cent, up from less than 1 per cent a year ago. The 0-1 year could be considered a sweet spot for investment owing to the higher yields being offered vs the longer-term securities,” Bandhan Mutual Fund said in the statement.
“This relatively higher dollar return can be further complemented by any weakening in the rupee currency to the dollar, as has been witnessed in nine out of the last 10 calendar years,” it added.
Vishal Kapoor, CEO, Bandhan Mutual Fund said: “Bandhan US Treasury Bond 0-1 year Fund of Fund seeks to provide investors the opportunity to create a dollar asset for funding a near-term or defined expense, without wanting to take any equity market-linked volatility. The fund invests in US treasuries with 0-1 year maturity, which means it offers a much-needed blend of relatively high-quality and low-volatility investment opportunity.”
“Currently, mutual funds offered global diversification via equity-oriented funds, but this fund is another step in offering opportunities via debt-oriented fund. Additionally, the spread between the US and India’s 1-year government bond yields has narrowed significantly from approximately 390 basis points to about 227 basis points since February 2022, which clearly demonstrates that exposure to US treasury bonds is relatively more attractive for Indian investors,” he added.
Investors can make their investments through licensed mutual fund distributors, online platforms, as well as, directly on the fund house’s website, Bandhan Mutual Fund further said in the statement.