Baroda BNP Paribas Mutual Fund on January 16, 2023 launched the Baroda BNP Paribas NIFTY SDL December 2026 Index Fund.
The new fund offering (NFO) opened on January 16, 2023 and will close on January 23, 2023. The minimum application amount is Rs. 5,000 and in multiples of Re 1 thereafter. The fund has no entry or exit load.
The open-ended target maturity index fund will be benchmarked against the NIFTY SDL December 2026 Index and replicate and track it. Nifty SDL Dec 2026 Index constituents are state development loans (SDLs) maturing around December 31, 2026. The maturity of the scheme will be December 31, 2026.
According to a press release by Baroda BNP Paribas Mutual Fund, the scheme will invest in a trio of fixed maturity, easy liquidity, and high-quality funds. Being a passively-managed debt index fund, the fund will employ an investment strategy that seeks to offer returns that are in line with the underlying index, the release said.
The fund has been categorised as having a relatively high interest rate risk and relatively low credit risk.
Baroda BNP Paribas Mutual Fund further said in the press release that the fund is suitable for investors who are looking to generate income, have a moderate risk appetite, and their investment horizon matches with the maturity date of the fund. Target maturity funds have potential to offer better post tax returns in comparison to traditional investments, the release added.
“Following rapid hike in policy rates over last year, fixed income funds now offer attractive opportunity for investors. After peaking at 7.8 per cent in April 2022, consumer price index (CPI) inflation has fallen to its lowest level in the last 12 months at 5.7 per cent in December. This reduces pressure for further hike in interest rates. We particularly like 3–5-year SDLs, where yields have risen by nearly 175-200 basis points (bps) over last year, and the yield curve is virtually flat beyond this maturity,” Suresh Soni, CEO, Baroda BNP Paribas Mutual Fund said in the statement.
“In addition to attractive coupon accrual, investors can potentially gain from bond price appreciation as well,” he added.
