- The open-ended Target Maturity Index Fund is investing in AAA CPSE Bonds and State Development Loans (SDLs) representing Nifty AAA CPSE Bond Plus SDL Apr 2027 60:40 Index.
Nippon India Mutual Fund (MF) launched Nippon India Nifty AAA CPSE Bond Plus SDL- Apr 2027 Maturity 60:40 Index Fund, an open-ended Target Maturity Index Fund investing in AAA CPSE Bonds and State Development Loans (SDLs) representing Nifty AAA CPSE Bond Plus SDL Apr 2027 60:40 Index.
The instruments will be maturing during the twelve-month period ending 30 April, 2027.
The new fund offer (NFO) period for subscription was closed 23 March, 2022. However, being an open-ended fund, the scheme will be available for subscription soon. The entry load and exit load is nil for the scheme. The minimum subscription amount is ₹1,000 and in multiples of ₹1 thereafter.
The performance of the scheme would be benchmarked against the Nifty AAA CPSE Bond Plus SDL Apr 2027 60:40 Index and its fund managers are Vivek Sharma and Siddharth Deb.
In terms of taxation, when invested for over 3 years, gains are taxed at 20% after indexation. If held for less than 3 years, the short-term capital gains are taxed at slab rates of the individual.
Target Maturity Funds have passive investments in debt securities that aim to replicate the composition of the underlying index and have a specific maturity date. These funds typically hold securities to maturity and follow a roll-down approach. The maturity date of the underlying index – Nifty AAA CPSE Bond Plus SDL- Apr 2027 Maturity 60:40 Index – is April 30, 2027.
In the underlying index, for the CPSE component, AAA-rated bonds from Central Public Sector Enterprises (CPSEs), Maharatna, Navratna and Miniratna, Public Financial Institutions (PFIs) owned by GOI are eligible to be part of the index.
In terms of SDLs, instruments from 13 states/UTs are selected based on their outstanding amount.
The scheme falls under the category of relatively high-interest rate risk and relatively low credit risk.
The interest rate risk – fluctuation in bond prices with change in interest rates in the economy – will be higher if the investments are not held till maturity. There is a risk of mark-to-market losses if the funds are withdrawn before maturity.
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