ICICI Prudential Mutual Fund launched two target maturity index funds – ICICI Prudential Nifty SDL Dec 2028 Index Fund and ICICI Prudential Nifty G-Sec Dec 2030 Index Fund. These are open-ended passively managed funds that replicate the underlying debt index having a specific maturity date. The constituents of the index are generally hold-till-maturity.
“In a rising interest rate scenario, investors looking for fixed duration returns within a specific maturity bucket can consider investing in Target Maturity Index Funds,” said Chintan Haria, Head – Product Development and Strategy, ICICI Prudential AMC.
“Some of the key features of the target maturity funds is that it largely adopts a hold-to-maturity approach as it replicates the underlying index which constitutes of State Development Loans of various States or Union Territories of India or G-Secs depending on the type of the offering chosen. If held for more than three years, investors get the benefit of indexation which significantly increases the post-tax returns of those in higher tax brackets,” he added.
ICICI Prudential Nifty SDL Dec 2028 Index Fund will invest in the constituents of Nifty SDL Dec 2028 index while ICICI Prudential Nifty G-Sec Dec 2030 Index Fund will invest in the constituents of Nifty G-Sec Dec 2030 Index.
The new fund offer for both schemes will be available from October 4, 2022 till October 11, 2022. ICICI Prudential AMC said that both the offering aims to provide returns that closely correspond to the total return of the underlying index, subject to tracking errors.
The maturity date for ICICI Prudential Nifty SDL Dec 2028 Index Fund is December 29, 2028 while ICICI Prudential Nifty G-Sec Dec 2030 Index Fund will mature on December 31, 2030.
Should you invest?
Target maturity funds (TMFs) come with low credit risk as these schemes invest in Index consisting of sovereign instruments such as SDLs and G-Secs (depending on the respective schemes. These schemes also try to minimise the impact of maturity as the investments are held till maturity. You may invest in TMFs if looking for better returns than traditional investment avenues like Fixed Deposits or Gold.
However, you should keep in mind that investments in traditional investment avenues offer assured or guaranteed returns however investments in mutual funds are subject to market risks.
(Disclaimer: Mutual Funds are subject to market risk. Please consult your financial advisor before making an investment decision)