Axis Mutual Fund, one of the fastest growing fund houses in India, announced the launch of their new fund offer - 'Axis CRISIL SDL 2027 Debt Index Fund'. It is a target maturity Index Fund whose benchmark maturity is May 31, 2027. The new fund will track the CRISIL IBX SDL Index - May 2027 and the portfolio is designed to invest predominantly in a portfolio of State Development Loans (SDLs) maturing between December 01, 2026 to May 31, 2027. The index will be managed by CRISIL Indices Limited.
Understanding SDLs (State Development Loans) & Target Maturity Funds
SDLs are state government debt issued to meet budgetary expenses and implement development projects. SDLs are one of the most liquid instruments that trade above the G-Sec curve and can be held for the long term. This trading is managed by the RBI.
Target maturity funds have started gaining importance since they allow investors to take advantage of duration strategies, due to their defined tenures. The fund manager achieves this by buying securities with similar maturities as close to the defined maturity date and holds them to maturity. The strategy aims to negate any duration risk for investors who remain invested through the life of the fund.
Axis CRISIL SDL 2027 Debt Index Fund
Axis CRISIL SDL 2027 Debt Index Fund's target maturity structure helps in better allocation, building a high quality passive portfolio and efficient taxation. It is ideal for investors who are looking for a relatively longer investment horizon, providing exposure to a diversified portfolio in line with the index's maturity period. The scheme seeks to provide market-linked returns as represented by the underlying index. The CRISIL IBX SDL Index will be rebalanced every quarter and comprises of SDLs issued by 12 states based on the following parameters:
- Minimum issue size of INR 1,000 Cr
- Emphasis on liquidity - Index will be evaluated basis volume and frequency of trading in underlying securities
- Weighted basis liquidity and size of issuance to ensure portfolio liquidity
Commenting on the launch of the NFO, Chandresh Nigam, MD & CEO, Axis AMC said, "The launch of the Axis CRISIL SDL 2027 Debt Index Fund is another step towards building the passive investment segment into an attractive proposition for a broad range of investors. As a fund house that believes in 'responsible investing', we are offering investors the opportunity to invest in quality assets. We are confident that this fund will be a notable add-on that will yield long term wealth creation opportunities for our investors."
Top features of the fund include:
- The Opportunity: 5-year space has seen yields rise by over 50 bps since December 2021. Yields attractive as compared to tenors
- Core Allocation: Ideal solution for investors looking to invest with a 5-year investment horizon
- Portfolio mechanics: Low cost hassle-free solution for investors looking to build their fixed income portfolio
- Simple and Easy: Target maturity and high quality portfolio coupled with the benefit of indexation
The new fund offers (NFO) opened for subscription from February 07, 2022 to February 21, 2022.