HDFC Asset Management Company Limited (HDFC AMC) has announced the New Fund Offer (NFO) for HDFC Long Duration Debt Fund. The scheme will invest in long-dated government securities with a roll-down strategy. In a statement, the AMC said the scheme may be best suited for investors looking to achieve long-term goals. It could work as a core constituent of debt asset allocation for meeting the long-term goals of investors.
HDFC Long Duration Debt Fund is an open-ended debt scheme that aims to invest in debt instruments such that the Macaulay Duration of the portfolio is greater than 7 years. The Fund will aim to provide a hedge against long-term expected inflation and offer tax-efficient regular cash flows through Systematic Withdraw Plan, the AMC said.
In view of the recent interest rate hikes, HDFC Long Duration Debt Fund also offers investors an opportunity to invest in the longer end of the yield curve and earn prevailing yields.
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“HDFC Long Duration Debt Fund provides investors with an opportunity to invest in the longer end of the yield curve. Long Duration Debt can form an integral part of an investor’s asset allocation mix,” said Navneet Munot, Managing Director and Chief Executive Officer, HDFC AMC.
The scheme will be managed by Shobhit Mehrotra, Head – Fixed Income, HDFC Asset Management Company, who has over 30 years of experience in fund management and the fixed income market.
“India is likely to see the highest growth over the next 5 years among all the major economies. Several structural growth drivers will support India’s growth story. The total debt to GDP remains the lowest among the major global economies; thus, there is potential to grow by leveraging,” said Mehrotra.
“With rate hikes of 225 bps during 2022, a large part of curve flattening has already happened; yield movement at the longer end has been relatively small. Interest rates generally fall as countries move up the economic ladder. Hence, India offers a conducive environment for long-duration debt,” he added.
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The NFO opened on January 06, 2023, and closes on January 17, 2023.
The AMC said that long-duration debt funds offer tax efficiency due to indexation (after 3 years). Therefore investors may look at HDFC Long Duration Debt Fund as a core constituent of debt asset allocation strategy for meeting long-term goals.
(Disclaimer: The above content is for information purposes only based on a press release by HDFC AMC. Mutual Fund investments are subject to market risks. There is no assurance or guarantee that the fund’s objectives will be met. Please consult your financial advisor before investing)