Mirae Asset Mutual Fund on Monday launched two new open-ended target maturity index funds: Mirae Asset Nifty AAA PSU Bond Plus SDL April 2026 50:50 Index Fund and Mirae Asset CRISIL IBX Gilt Index – April 2033 Index Fund that come with a relatively high-interest rate risk and low credit risk.
The former index fund will invest in AAA-rated public-sector undertaking (PSU) bonds and state development loans (SDL) maturing on or before April 30, 2026, while the latter will invest in investing in dated government securities (G-Sec), maturing on or before April 29, 2033, subject to tracking errors.
Unlike other fixed maturity plans, the Mirae Asset Nifty AAA PSU Bond plus SDL 50:50 Index Fund has no lock-in period, meaning investors can redeem the amount anytime during the fund’s lifecycle. On the other hand, the Mirae Asset CRISIL IBX Gilt Index – April 2033 Index Fund has a 10-year lock-in.
In a press release, the fund house stressed the Mirae Asset Nifty AAA PSU Bond plus SDL 50:50 Index Fund offers higher tax efficiency than traditional investment avenues, as there is potential to avail a four-per cent indexation benefit, depending on the investors’ holding period since long term capital gain (LTCG) is taxed at 20 percent post indexation benefit.
Conversely, Mirae Asset CRISIL IBX Gilt Index – April 2033 Index Fund investors could expect a relatively higher yield as the 10-year G-Sec is likely to move in a “range-bound manner if CPI (consumer price index) remains in RBI tolerance limit” and the economic outlook remains strong.
The new fund offers (NFOs) opened on October 10, 2022, and will close on October 18, 2022. The minimum subscription amount for the funds will be Rs 5,000, and after that, in multiples of Re 1.
The fund house said both funds would be available in regular and direct plans. Post NFO , the minimum additional purchase amount would be Rs 1000, and after that, in multiples of Re 1.
Possible Benefits of the Funds
Data provided by the fund house showed that SDLs and AAA-rated PSU securities generally carry lower credit risk than corporate bonds. However, in the long-term maturity segment, G-Secs are relatively better placed than other alternatives, such as SDL and AAA-PSU corporate bonds.
The fund house further noted that compared to five-year and 10-year AAA PSU bonds, three-year AAA PSU bonds and SDLs are trading closer to their historical average across government securities.
Describing the funds, Mahendra Jajoo, the chief information officer (CIO) of the fixed income division of Mirae Asset Investment Managers (India) Pvt. Ltd. said, target-maturity-index funds “seem to emerge as one of the popular categories,” given the continued rate hikes in a volatile market environment.
Jajoo added that long-term rates had risen sharply over the last year, and they could continue in that direction with the central bank’s explicit guidance on CPI inflation.
