IDFC Mutual Fund has launched two fixed income funds – the IDFC Gilt 2027 Index Fund and the IDFC Gilt 2028 Index Fund.
Both are open-ended Target Maturity Index Funds which will invest in government securities and treasury bills that constitute the CRISIL Gilt 2027 Index and Gilt 2028 Index respectively. The New Fund Offer (NFO) opens on Friday, March 12, 2021 and closes on Friday, 19 March, 2021.
Target Maturity Funds have a defined maturity date, unlike regular open-end mutual funds that remain open indefinitely. Upon maturity, the net asset value of these funds will be paid back to unitholders. Additionally, IDFC’s Gilt Index Funds will invest only in sovereign rated instruments – which are guaranteed by the Government of India – thereby reducing any credit risk. These funds will also steadily reduce the residual maturity of investments over the holding period, thereby reducing duration risk or the fund’s sensitivity to a change in interest rates.
Highlighting the current opportunity, Vishal Kapoor, CEO, IDFC Asset Management Company, says: “The IDFC Gilt 2027 Index Fund and IDFC Gilt 2028 Index Fund are ideally suited for investors seeking high-quality investments with a matching investment time horizon. The funds are positioned with an aim to benefit from the current steep yield-curve, and we believe that six year and 7-year Government Securities are relatively attractive versus ultra-short tenor securities as well as corporate bonds when compared to average spreads over the last five years. This makes this launch very timely. In addition, Gilts offer high liquidity, thereby lowering any impact cost. Investors could also look at using these funds as part of a bar-bell strategy, with a combination of short-end investments combined with intermediate duration strategies like these gilt index funds to aim to optimise their yields. Both our funds offer simple, low-cost access to the highest quality debt investments for investors with an expectation of reasonable returns over the holding period.”
Anurag Mittal, Senior Fund Manager, IDFC AMC who has over a decade of industry experience is the fund manager for both schemes.
Both funds are open-ended and will offer a daily purchase and redemption facility. The minimum investment amount is NIR5,000, and there will be no exit load on redemptions. The IDFC Gilt 2027 Index Fund will mature on 30 June, 2027, and the IDFC Gilt 2028 Index Fund will mature on 05 April, 2028.
