PGIM India AMC on Wednesday announced the launch of PGIM India CRISIL IBX Gilt Index—April 2028 Fund, which will invest in government securities (G-Secs) and Treasury bills (T-Bills).
This index fund will give a 98 per cent weightage to G-Secs and 2 per cent to T-bills to generate returns corresponding to the CRISIL IBX Gilt Index—April 2028, before fees and expenses, subject to tracking errors.
The fund matures on April 5, 2028, and it will open for subscription on February 2 and close on February 16, 2023.
PGIM India said all selected G-Sec securities will mature between September 6, 2027 and April 5, 2028 and it will review and rebalance the index on a six-monthly basis.
In a press release, the fund house said that the minimum subscription amount is Rs 5,000, with additional purchase of Rs 1,000 thereafter.
Commenting on the fund, Puneet Pal, head of fixed income at PGIM India Mutual Fund who will manage the fund along with fund manager Bhupesh Kalyani, said: The fund offers an optimal opportunity to benefit from the current interest rates.
“While TMFs (target maturity funds) are permitted to invest across G-Sec, SDL (state development loans), and corporate bonds, we believe G-Sec oriented portfolios offer better risk-reward opportunity.”
He added, “Given the aggressive rate hikes, major central banks, including RBI, have slowed the quantum of rate hikes. With inflation cooling off globally and locally, rates may also peak out consequently. G-Sec oriented mutual fund portfolios generally provide an additional spread over traditional deposits and are tax-efficient for investors looking to lock-in at the elevated yield levels.”
Pal said PGIM India will focus on G-Sec based funds rather than a mixture of SDL and corporate bonds going ahead.”
Why A target Maturity Fund?
The fund house said that the yield curve is flat, meaning the market is expecting inflation to fall in the future. In addition, the spreads of SDLs and AAA PSU instruments over G-Sec are much below their median, which favours G-Sec.
Also, the fund house believes the rates and yields could be close to peaking out, as inflation has cooled off soon globally and locally.
Who Should Invest?
This target maturity scheme is ideal for investors looking for long-term investments, with high liquidity in their portfolio, tax-efficiency, and reasonable returns. Those with a low-risk appetite for credit exposures can also explore.
Highlights In A Nutshell
• The PGIM India CRISIL IBX Gilt Index–April 2028 Fund will track the underlying index CRISIL-IBX Gilt Index—April 2028
• The NFO starts on February 2, 2023, and closes on February 16, 2023.
• The NFO allotment date is February 22, 2023
• The NFO will reopen on February 27, 2023
• The fund has no exit load and it will be available in regular & direct mode
• It will invest in G-Secs and T-Bills