SBI Mutual Fund Unveils Three Target Maturity Funds, Focusing On Higher-Rated Assets, Rate Cycles

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SBI Mutual Fund on Wednesday announced launching three open-ended target maturity funds: SBI CRISIL IBX Gilt Index Fund (June 2036), SBI CRISIL IBX Gilt Index Fund (April 2029), and SBI CRISIL IBX SDL Index Fund (September 2027) as part of its offerings in the passive segment. 

The new fund offer (NFO) for SBI CRISIL IBX Gilt Index (June 2036) opens on Thursday, September 22, 2022, and closes on Wednesday, September 28, 2022. 

However, the NFOs for SBI CRISIL IBX Gilt Index Fund (April 2029) and SBI CRISIL IBX SDL Index Fund (September 2027) will open on Monday, September 26, 2022, and close on Monday, October 3, 2022. 

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  

The fund house said the schemes would provide returns matching the securities’ total returns represented by the underlying index, “subject to tracking error.” 

Unveiling the funds, SBI Mutual Fund Deputy MD and chief business officer DP Singh said these funds could be a good fit for investors under the current high interest-rate scenario as they provide the “opportunity to invest at current market yields.”  

Singh said that since investors would stay invested till maturity, it can help them manage the risks linked to the interest rate cycles. He added that the funds would predominantly invest in higher-rated assets like government securities, AAA-rated securities, and public sector undertaking (PSU) bonds.  

These funds will have higher liquidity than traditional investment avenues, as investors can enter and exit the scheme anytime, offering significant flexibility.  

Singh said the funds “offer tax efficient returns” due to the indexation benefit offered by debt funds.  

Fund Allocation  

The schemes would invest a minimum of 95 per cent and a maximum of 100 per cent of its assets in securities covered by the three indexes.  

However, it may also invest up to 5 per cent of its assets in government securities maturing on or before the maturity date of the schemes, money-market instruments, such as Triparty Repo, and units of liquid mutual funds.  

Subscription Amount 

The minimum subscription amount for each fund is Rs 5,000, and after that, in multiples of Rs 1.  

SBI Mutual Fund’s average assets under management (AAUM) stood at Rs 6.99 lakh crore as of August 31, 2022.

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