UTI-Fixed Term Income Fund – Series XXVII, as the name suggests, is a close-ended income scheme. These schemes mostly have a debt or equity mandate. They have a pre-specified maturity period or a lock-in, after which the scheme becomes open-ended and one can withdraw one’s money easily.
This scheme would invest in a diversified portfolio of various rated papers, i.e., corporate bonds, debentures, etc, which mature on or before the date of maturity of the scheme. As the scheme is a close-ended fund with no regular inflows and as redemption is not allowed till maturity, the portfolio normally constructed in the beginning for the tenure of the scheme would have low portfolio turnover. The locked-in portfolio would nearly eliminate interest rate risks providing a potential opportunity for better returns.
Here are some facts to know about the close-ended income scheme:
The scheme aims to generate returns by investing in a portfolio of fixed income securities maturing on or before the date of maturity of the scheme. However, the scheme does not guarantee/indicate any return. There is no assurance that the fund’s objective will be achieved.
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Tenure of the scheme is 1096 days to 3700 days.(Actual tenure shall be incorporated prior to the launch of a scheme)
Plans and Options offered
The scheme offers following plans:
Both the plans offer following options
(i) Growth Option
(ii) Quarterly Dividend Option with Payout facility
(iii) Flexi Dividend Option with Payout facility
(iv) Annual Dividend Option with Payout facility
(v) Maturity Dividend Option with Payout facility
In the case where no option is exercised by the applicant/unit holder at the time of making his investment or subsequently he will be deemed to be under the Growth Option and his application will be processed accordingly. In case dividend option is indicated and the periodicity is not mentioned, then the default dividend option will be the Quarterly Dividend Option.
Direct Plan is only for investors who purchase/subscribe units directly with the fund and is not available for investors who route their investments through a distributor.
Under normal circumstances, the asset allocation under the schemes will be as below
The Direct Plan will be a separate plan under the scheme and shall have a lower expense ratio excluding distribution expenses, commission etc and will have a separate NAV. No commission shall be paid/charged from Direct Plan.
The Direct and Regular plans will have a common portfolio.
During the New Fund Offer, the units of the scheme will be sold at the face value of Rs 10 per unit. Redemption will be done on the maturity date at NAV based price of the scheme. As per SEBI guidelines, the AMC/Mutual Fund shall not redeem the units of the scheme before the date of maturity.
The units of the scheme will be listed on the National Stock Exchange (NSE), after the closure of the New Fund Offer period. Investors will be able to enter and exit the scheme through transactions in the secondary market within five business days of allotment.
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Redemption / Maturity
The scheme(s) will come to an end on the maturity date. On maturity of the scheme, the outstanding units shall either be redeemed and proceeds will be paid to the unitholder or will be switched out to any existing open-ended scheme/a Fixed Term Income Fund of UTI Mutual Fund open for sale on the date of maturity in the respective options, as opted by the unitholder, as the case may be.
If the investor does not select any of the aforesaid options, then the units of the scheme will be compulsorily and without any further act by the unitholder(s) redeemed on the Maturity Date/Final Redemption Date. On the Maturity Date / Final Redemption Date of the scheme, the units under the scheme will be redeemed at the Applicable NAV.
CRISIL Composite Bond Index is the benchmark for UTI-Fixed Term Income Fund – Series XXVII for Schemes with tenure of 1096 days to 2555 days. I-Sec Li-Bex is the benchmark for UTI-Fixed Term Income Fund – Series XXVII for Schemes with tenure of 2556 days to 3700 days.
Entry/ Exit Load
Entry Load: NIL, Redemption not permitted before maturity. On the Maturity Date / Final Redemption Date of the Scheme, the units under the scheme will be redeemed at the Applicable NAV.
Declaration of NAV on a daily basis within 5 business days from the date of allotment.
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Minimum Application Amount
The minimum amount of investment is Rs 5000 and in multiples of Rs 10 under all the plans/options.