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IDFC Mutual Fund Introduces Two Innovative Fixed Income Funds

Shreoshree Chakrabarty March 12, 2021

Two innovative fixed income funds have been launched by IDFC Mutual Fund and both of the funds are open-ended Target Maturity Index Funds, the IDFC Gilt 2027 Index Fund and the IDFC Gilt 2028 Index Fund. Constituting the CRISIL Gilt 2027 Index and Gilt 2028 Index respectively, the Target Maturity Index Funds will invest in those government securities and treasury bills. Opening on Friday, March 12, 2021, the New Fund Offer (NFO) will last till Friday, March 19, 2021.

Unlike regular open-end mutual funds that remain open indefinitely, Target Maturity Funds have a defined maturity date. The net asset value of these funds upon maturity will be paid back to unitholders. IDFC Gilt Index Funds are guaranteed by the Government of India as they invest only in sovereign rated instruments, thereby reducing any credit risk. Reducing the duration risk or the fund’s sensitivity to a change in interest rates, these funds will also steadily reduce the residual maturity of investments over the holding period.

Highlighting the current opportunity, Vishal Kapoor, CEO, IDFC Asset Management Company said, “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 6 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.”

The fund manager for both schemes is Mr. Anurag Mittal, Senior Fund Manager, IDFC AMC who has over a decade of industry experience.

Offering a daily purchase and redemption facility, both the funds are open-ended. There will be no exit load on redemptions and the minimum investment amount is Rs. 5,000. The IDFC Gilt 2027 Index Fund and the IDFC Gilt 2028 Index Fund will mature on June 30, 2027 and April 05, 2028 respectively.

IDFC AMC was established in 2000 and is one of India’s Top 10 asset managers which at the end of December 2020 had an average AUM of around Rs. 1,20,000 crores, across 57 Mutual Fund schemes. It has investors across over 250 cities and towns in India, and an experienced investment team with a deep on-the-ground presence in over 46 cities. The savers are helped in becoming investors and creating wealth by IDFC AMC. The AMC offers a range of prudently constructed investment products, to support this objective across equities, fixed income and liquid alternatives – that aim to provide performance consistent with their well-defined objectives.

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