DSP Investment Managers on January 9, 2023 launched the DSP Crisil SDL Plus G - Sec Apr 2033 50:50 Index Fund. The new fund offer (NFO) will open for subscription on January 10 and close on January 19, 2023.
DSP Investment Managers said in a press release that this open-ended target maturity index fund will invest in the constituents of CRISIL SDL Plus G-Sec Apr 2033 50:50 Index with maturity on April 25, 2033. The portfolio is proposed to be invested in highly liquid Government securities (G-Sec) and state development loans (SDLs) from states with good financial position and high liquidity in a 50:50 ratio.
“The portfolio has a unique design with dual filters for selecting SDLs. Instead of just applying a liquidity filter, there is an additional quality filter of low leverage. This quality filter is based on each state’s GDP in proportion to its total liabilities and the top-5 states/UTs with the best quality scores will be selected with 10 per cent weight to each state,” DSP Investment Managers said in the release.
“Hence the proposed portfolio is likely to have a combination of highly liquid G-Secs and a selective list of SDLs with low leverage and high liquidity, all which are maturing within the 12-month period ending April 25, 2033,” the release added.
The break-up weightage is as follows.
7.95% G-Sec 2032 – 25 per cent
7.26% G Sec 2032 – 25 per cent
Maharashtra, Gujarat, Karnataka, Assam and Telangana state governments – 10 per cent each.
The minimum application amount will be Rs 500 and in multiples of Re. 1. The minimum additional application amount will also be Rs. 500 and in multiples of Re. 1. There is no exit load.
According to DSP Investment Managers, the fund will offer investors the advantage of a bond like structure with fixed maturity positioned to provide visibility of returns at maturity, along with the benefits of indexation of long-term capital gains.
“The open-ended structure of the fund also allows constant buying and selling of fund. It also offers tax efficiency via long-term capital gains taxation at a lower rate of 20 per cent with 11 years Indexation benefits if invested on or before March 31, 2023,” the release further said.
DSP Investment Managers said that the scheme offers the benefits of high liquidity (G-secs), low credit risk (sovereign securities), higher yield, and tax benefits with indexation benefits.
Sandeep Yadav, head – fixed income, DSP Investment Managers says: “Since the fund will only invest in government securities of centre and states maturing around 2033, it provides a good opportunity for a risk aware investor. Moreover, interest rates have increased significantly in 2022. The higher rates provide a better entry level for investors.