NEW DELHI: Axis Mutual Fund, an asset management company (AMC), on Friday announced the launch of a new fund offer (NFO) for a floater fund, an open-ended debt scheme predominantly investing in floating rate instruments. The NFO will open for subscription on 12 July.
Axis Floater Fund is an actively managed portfolio of floating rate instruments and fixed-rate bonds that are swapped for floating rate characteristics through swaps. The floating rate strategies aim to manage interest rate risks by investing in bonds where the coupon is linked to market movements.
The fund aims to offer solutions for short-term investors looking to navigate a possible rising interest rate environment and also an ideal parking solution for their investment. The fund will be managed by Aditya Pagaria, fund manager–fixed income, Axis Mutual Fund.
Ideally, a floating rate bond provides a market-linked return and works well for those looking to hedge interest rate risks in a rising rate environment.
According to the company, the fund offer will be crafted with a dynamic mix of high-quality instruments & AA issuers. “It targets a portfolio average maturity of 6-18 months. This makes it suitable for investors looking to park short-term surplus funds or for those looking to limit the interest rate risks in their debt portfolio,” the AMC said.
The new fund will target 80% AAA-rated or A1 papers along with 20% allocation to AA issuers to capture opportunities across the debt market.
Announcing the launch of the NFO, Chandresh Nigam, managing director and chief executive officer, Axis AMC, said: “The economic fundamentals are improving gradually and returning to normalcy. These are early signs of a pickup in demand, and we believe we are on the cusp of a new growth cycle. The country is also likely at the bottom of the interest rate cycle and we expect rates to see a gradual rate hike cycle in the medium term. With the launch of this fund, we believe that we will provide an efficient solution for short-term investors looking to navigate a possible rising rate environment.”
The minimum investment in the NFO would be ₹5,000 and in multiples of Re 1, thereafter. There will be no exit load for this fund.
Never miss a story! Stay connected and informed with Mint. Download our App Now!!