Axis MF announces new Target Maturity Fund , says offer has moderate risk

Fund plans to invest 95-100% of its assets in fixed-income instruments that mirror the CRISIL-IBX AAA Financial Services - Sep 2027 Index

Axis Mutual Fund has launched a new fund offer (NFO) that will invest in constituents of CRISIL-IBX AAA Financial Services Index – Sep 2027, providing a moderate interest rate risk and relatively low credit risk.

 

AXIS CRISIL-IBX AAA Financial Services – Sep 2027 Index Fund will offer regular and direct plans both with growth and income distribution cum capital withdrawal options.

 

The open-ended fund allows investors to customise their entry and exit through systematic investment and withdrawal options, said Axis Mutual Fund in a statement. It is a passively managed scheme offering exposure to the constituents of the CRISIL-IBX AAA Financial Services – Sep 2027 index, tracking its performance before expenses. The scheme will follow a strategy of holding debt instruments from the financial services sector until maturity, unless sales are required for redemptions or rebalancing.

 

 

“Axis CRISIL-IBX AAA Bond Financial Services – Sep 2027 Index Fund is our first offering in sectoral financial services based target maturity mutual fund scheme. It gives an opportunity to investors to invest in a high-quality, AAA-rated portfolio. Target maturity funds can be a viable option for investors seeking some degree of predictability. The newly launched scheme will be an important add-on to Axis Mutual Fund’s portfolio of passive debt offerings,” said B. Gopkumar, managing director and chief executive officer of Axis AMC.

 

What are target maturity funds

 

Target maturity funds are open ended passive debt mutual fund schemes that track an underlying bond index having a pre-defined maturity. Portfolio constituents aggregately have key characteristics of the underlying index maturity of individual securities is lower than the index’s stated maturity These funds follow a buy and hold approach. Coupons are reinvested, which adds to the compounding benefit and leads to deferment of taxes. Units of the scheme are automatically redeemed at the applicable NAV on the maturity date Minimal interest rate risk over the defined maturity

 

Details of NFO

 

Investment objective: The investment objective of the scheme is to provide investment returns before fees and expenses that closely correspond to the total returns of the securities as represented by the CRISIL-IBX AAA Financial Services Index – Sep 2027, subject to tracking error/ tracking difference.

 

Asset allocation: The scheme will allocate 95-100 per cent in fixed income instruments replicating CRISIL-IBX AAA Financial Services Index – Sep 2027 and 0-5 per cent in debt and money market instruments. 

 

The scheme will follow a buy and hold investment strategy in which debt instruments issued by the financial services sector will be held till maturity unless sold for meeting redemptions/rebalancing.

 

Benchmark: The scheme will be benchmarked against CRISIL-IBX AAA Financial Services Index – Sep 2027.

 

Minimum investment: The minimum application amount is Rs 5,000 and in multiples of Re 1 thereof. The minimum additional purchase amount is Rs 1,000 and in multiples of Re 1 thereof. The minimum amount for monthly SIP is Rs 1,000 and in multiple of Re 1 with minimum six instalments.

 

Fund manager: Aditya Pagaria.

 

Who should invest?

 

The scheme is suitable for investors who are seeking income over the target maturity period and want an open ended target maturity index fund tracking CRISIL IBX AAA Financial Services Index – Sep 2027, subject to tracking error/tracking difference.