Reliance Nivesh Lakshya Fund, an open-ended debt fund to be launched on June 18

Reliance Mutual Fund will launch Reliance Nivesh Lakshya Fund, an open-ended debt scheme which will invest in long-dated government securities, according to the information on the fund house's website.

The scheme will remain open for subscription until July 2. The fund house aims to raise Rs 2,500 crore through the new fund offer.

Reliance Nivesh Lakshya Fund is a tax-efficient debt product that aims to capture the prevailing long-term yields by investing in 25 to 30 years Government Securities (G-Sec) for attaining long-term goals for investors.

This scheme will invest its entire corpus in debt and money market instruments. It also has the provision to invest up to  10 percent of its corpus in Real estate investment trusts (REITs) and Infrastructure Investment Trusts (InvITs).

This debt fund is a passive strategy fund where the investor holds the paper till maturity by locking the interest rate at present value and through systematic withdrawal plan (SWP) or simple redemption will remove money for its needs.

The fund will, every six months, earn all interest payments from the government, for 28 years and then at maturity, will receive the principal amount. Thus the fund will earn the current yield, if the security is held till maturity, ceteris paribus.

Also if the underlying investment is held till maturity, it would not be subjected to interest rate risks, whether interest rate increases or decreases.

When the interest rate goes up the fund manager can invest at the higher interest rate and if rates are down the investor may not complain as he is making capital gains.

Other features:

Plans: Direct and Regular

Options: Growth and Dividend

Minimum investment: 5,000 and in multiples of one rupee thereafter

Exit Load: 10 percent of the units allotted can be redeemed every year without any exit load, on or before completion of 36 months from the date of allotment of units.

— 1 percent if redeemed or switched out on or before completion of 36 months from the date of allotment of units

— Nil, if redeemed or switched out after completion of 36 months from the date of allotment of units

— Benchmark Index: Crisil Long Term Debt Index

Fund Manager: Prashant Pimple and Kinjal Desai