Asset management company SBI Mutual Fund is scheduled to launch three target maturity funds (TMFs), further expanding its offerings in the passive segment.
TMFs help investors navigate the risks associated with debt funds by aligning their portfolios with the maturity date of the fund.
These are passive debt funds that track an underlying bond index. Thus, the portfolio of such funds comprises bonds that are part of the underlying bond index, and these bonds have maturities hovering around the fund’s stated maturity. The bonds in the portfolio are held to maturity and all interest payments received during the holding period are reinvested in the fund.
SBI CRISIL IBX Gilt Index – June 2036 Fund, SBI CRISIL IBX Gilt Index – April 2029 Fund, and SBI CRISIL IBX SDL Index – September 2027 Fund are open-ended target maturities index funds investing in constituents of the CRISIL IBX Gilt Index – June 2036 Index, the CRISIL IBX Gilt Index – April 2029 Index, and the CRISIL IBX SDL Index – September 2027 Index.
The new fund offer (NFO) of SBI CRISIL IBX Gilt Index – June 2036 Fund will open on 22 September and close on 28 September.
The NFOs of SBI CRISIL IBX Gilt Index – April 2029 Fund and SBI CRISIL IBX SDL Index – September 2027 Fund will open on 26 September and close on 3 October.
D P Singh, deputy managing director and chief business officer, SBI Mutual Fund, said, “ TMFs can be a good fit for investors in the current rising interest rate scenario as these funds are giving investors the opportunity to invest at current market yields. Further, if the investor stays invested till the maturity of the fund, it can also help in managing the risk associated with change in interest rates cycle. These funds predominantly invest in higher rated instruments such as government securities, AAA-rated securities and PSU bonds.”
The schemes would invest a minimum of 95% and a maximum of 100% of its assets in securities covered by the CRISIL IBX Gilt Index – June 2036 / CRISIL IBX Gilt Index – April 2029 / CRISIL IBX SDL Index – September 2027.
They may also invest up to 5% of their assets in government securities maturing on or before the maturity date of the Scheme, money market instruments including Triparty Repo, and units of liquid mutual funds.
The minimum application amount required is ₹5,000 and in multiples of Re 1 thereafter.
The fund manager to the schemes would be Dinesh Ahuja.