Edelweiss Asset Management Limited on Tuesday said it will launch two open-ended target maturity index funds—Edelweiss CRISIL IBX 50:50 Gilt Plus SDL (June 2027) and Edelweiss CRISIL IBX 50:50 Gilt Plus SDL (April 2037).
The latter scheme is dubbed as India’s first target maturity index fund with a 15-year maturity period. Both schemes will invest in a mix of India government bonds (IGBs) and state development loans (SDLs).
Detailing the schemes, Radhika Gupta, MD & CEO of Edelweiss AMC Ltd., said in a press release, “Our new fund with April-2037 maturity will be India’s first Target Maturity Fund with 15 year-long maturity. Our endeavour has been to get long-term money through these funds.”
The CRISIL IBX 50:50 Gilt Plus SDL April 2037 Index Fund will open for subscription between September 27, 2022 and October 6, 2022, while the CRISIL IBX 50:50 Gilt Plus SDL June 2027 Index Fund will open for subscription between October 6, 2022, and October 11, 2022.
These maturity index funds will invest in the constituents of CRISIL IBX 50:50 Gilt Plus SDL Index – April 2037 and June 2027, respectively, and come with a relatively high interest rate risk and low credit threat.
The minimum subscription amount for both these schemes is Rs 5000, while both funds will have a defined maturity date.
The fund house said the schemes would “follow a ‘buy & hold’ strategy in which the bonds will be held until maturity unless sold for meeting redemptions, dividend payment rebalancing requirement or optimising the portfolio construction process.”
The portfolio of eligible securities, the fund house said, will have similar quantitative characteristics like that of the underlying index.
Data provided by the fund house shows the that industry’s passive debt category has surpassed the Rs 1 lakh-crore mark, accelerated by the launch of the first tranche of Bharat Bond ETF in December 2019. Five tranches of Bharat Bond ETFs were launched to date: 2023, 2025, 2030, 2031, and 2032, its data showed.
What Are Index Funds And Target Maturity ETFs?
The index funds and exchange traded funds (ETFs ) are open-ended debt funds with a fixed maturity date, corresponding the expiration date of bonds they hold in the portfolios. These investment vehicles typically provide liquidity, stability, and predictability of returns besides lower tax compared to the traditional instruments like fixed deposits.