AMCs line up differentiated target maturity funds amid stiff competition

Yield-to-maturity between 7.36% and 7.5% for these schemes with fixed tenure makes them attractive bet

With target maturity funds becoming one of the top investment options in the fixed income space, asset management companies (AMCs) are coming out with differentiated target maturity funds to present a better risk-reward proposition, maximise yields, and also to make their product stand out in a sea of offerings.

Target maturity funds, which first started as fixed-tenure open-ended debt funds investing in papers of AAA-rated public sector companies, now have at least 10 varieties, if one looks at the asset mix of the portfolios. 

There are now schemes that exclusively invest in gilt, state development loans (SDL), or AAA-rated corporate