IDFC Mutual Fund Launches Innovative Target Maturity Gilt Index Funds

IDFC Mutual Fund announced the launch of two innovative fixed-income funds- the IDFC Gilt 2027 Index Fund and the IDFC Gilt 2028 Index Fund.

Both funds 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) opened on Friday, March 12, 2021, and closed on Friday, March 19, 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 unit holders. 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 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.”

Mr. 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 Rs. 5,000, and there will be no exit load on redemptions. The IDFC Gilt 2027 Index Fund will mature on June 30, 2027, and the IDFC Gilt 2028 Index Fund will mature on April 05, 2028.

Established in 2000, IDFC AMC is one of India’s Top 10 asset managers with an average AUM of around Rs. 1,20,000crores at the end of December 2020, across 57 Mutual Fund schemes. It has an experienced investment team with a deep on-the-ground presence in over 46 cities, and investors across over 250 cities and towns in India. IDFC AMC is focused on helping savers become investors and create wealth.

To support this objective, the AMC offers a range of prudently constructed investment products – across equities, fixed income and liquid alternatives – that aim to provide performance consistent with their well-defined objectives.

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