Axis Mutual Fund on Monday said it is targeting to collect Rs 500 crore from its new state government debt index fund.
The open-ended target maturity index fund investing in constituents of the Crisil IBX SDL index-May 2027 offers high interest rate risk and a relatively low credit risk.
The fund is open from February 7 to 21.
Axis MF has set a target of mopping up Rs 500 crore during subscription period of the fund which has the benchmark maturity on May 31, 2027, Ragahv Iyengar, chief business development officer at the fund house, told PTI.
He said the portfolio of the fund is designed to invest predominantly in a portfolio of state development loans (SDLs) or state government debt, maturing between December 1, 2026 and May 31, 2027. The index will be managed by Crisil Indices, he added.
SDLs are one of the most liquid instruments that trade above the G-Sec curve and can be held long term. Other AMCs like ICICI and HDFC have launched SDL index funds over the past few months.
Target maturity funds have started gaining importance since they allow investors to take advantage of duration strategies, due to their defined tenures.
The fund manager achieves this by buying securities with similar maturities as close to the defined maturity date and holds them to maturity thus helping negate any duration risk for investors.
The Axis Crisil SDL 2027 debt index fund helps in better allocation, building a high quality passive portfolio and efficient taxation and is thus ideal for investors who are looking for a relatively longer investment horizon, providing exposure to a diversified portfolio in line. The scheme also seeks to provide market-linked returns as represented by the underlying index.
The Crisil IBX SDL index will be rebalanced every quarter and comprises SDLs issued by 12 states. Chandresh Nigam, MD & CEO of Axis AMC said the launch of the new SDL index fund is another step towards building the passive investment segment into an attractive proposition for investors.
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