UTI Mutual Fund has launched the UTI Long Duration Fund. The new fund offer (NFO) opened for subscription on March 6, 2023 and will close on March 15, 2023.
The open-ended debt scheme will invest in debt and money market instruments with an aim to maximise income while maintaining an optimum balance of yield, safety and liquidity. The fund will track the Crisil Long Duration Fund AIII Index. The scheme will aim to generate optimal returns with adequate liquidity. However, there is no assurance that the investment objective of the scheme will be achieved, UTI Asset Management Company (AMC) announced in a press statement.
The minimum application amount is Rs 5,000 and in multiples of Re. 1 thereafter. There are both multiple and direct plans, and both offer growth as well as dividend options. During the NFO period, the units of the scheme will be available at face value, i.e., Rs. 10 per unit.
There is no entry load, while the exit load has been kept variable. There is no exit load after three years from the date of allotment. Within three years from the date of allotment, the exit load will be nil for up to 10 per cent of the allotted units, and 1 per cent for beyond 10 per cent of the allotted units. The portfolio Macaulay Duration is above seven years, UTI AMC further said in the statement.
According to UTI AMC, the scheme is suitable for investors who are looking at long-term investment goals, are aiming to diversify their retirement portfolio, have a low-risk appetite for credit exposures, and are seeking a high-quality portfolio and tax-efficient reasonable returns.
Vetri Subramaniam, chief investment officer, UTI AMC Ltd, said: “Long duration fixed income funds are an appropriate option for investors with long-term financial goals, such as saving for retirement or funding child’s education, etc. These funds can provide a relatively stable source of income, compounding and potential capital appreciation over a longer investment horizon.”
He added: “Additionally, investors in long duration debt funds can also benefit from tax-efficient withdrawals after a three-year holding period. Capital gains in fixed income funds held for more than three years are considered as long-term capital gains and enjoy indexation benefit. This results in lower tax liability, thus making them attractive for those seeking to maximise their after-tax returns. It’s important to diversify your investment portfolio by investing in a mix of equity and fixed income funds. This will help you mitigate risk and reduce portfolio volatility.”
