New SBI MF schemes: 3 Target Maturity Funds to provide indexation benefits, tax-efficient returns. Details | The Financial Express

New SBI MF schemes: 3 Target Maturity Funds to provide indexation benefits, tax-efficient returns. Details

New Fund Offer: The funds will invest in constituents of the CRISIL IBX Gilt Index – June 2036 Index, the CRISIL IBX Gilt Index – April 2029 Index, and the CRISIL IBX SDL Index – September 2027 Index.

New SBI MF schemes: 3 Target Maturity Funds to provide indexation benefits, tax-efficient returns. Details
SBI Mutual Fund has launched three target maturity funds. Representational image/Pixabay

New Fund Offer: After announcing two equity index funds this week, SBI Mutual Fund on Wednesday (21 September 2022) launched three Target Maturity Funds (TMF). The three TMFs are SBI CRISIL IBX Gilt Index – June 2036 Fund, SBI CRISIL IBX Gilt Index – April 2029 Fund, and SBI CRISIL IBX SDL Index – September 2027 Fund. Here’s all you need to know about these TMFs:

Open-ended schemes

SBI MF said in a statement that the three schemes are open-ended target maturities index funds. The funds will invest in constituents of the CRISIL IBX Gilt Index – June 2036 Index, the CRISIL IBX Gilt Index – April 2029 Index, and the CRISIL IBX SDL Index – September 2027 Index.

Investment objective

SBI MF said that the investment objective of the target maturity funds is to provide returns that closely correspond to the total returns of the securities as represented by the underlying index, subject to tracking error.

The TMFs will invest a minimum of 95% and a maximum of 100% of their assets in securities covered by the CRISIL IBX Gilt Index – June 2036 / CRISIL IBX Gilt Index – April 2029 / CRISIL IBX SDL Index – September 2027.

Also Read: SBI Mutual Fund launches mid-cap and small-cap equity index funds. Should you invest?

The funds may also invest up to 5% of its assets in government securities maturing on or before the maturity date of the Scheme, money market instruments including Triparty Repo, and units of liquid mutual funds.

Who may benefit from TMFs?

TMFs allow investors to invest or withdraw at any time. The returns on these funds are predictable. TMFs also immunise investors against interest rate risks as the bonds are held till maturity.

Target maturity funds may be a good fit for investors in the current rising interest rate scenario as these funds are giving investors the opportunity to invest at current market yields, according to D P Singh, Deputy MD & Chief Business Officer, SBI Mutual Fund.

Singh further said that if the investor stays invested till the maturity of the fund, it can also help in managing the risk associated with changes in the interest rates cycle.

“These funds predominantly invest in higher rated instruments such as Government Securities, AAA rated securities and PSU Bonds. As compared to traditional investment avenues, these funds have higher liquidity as investors have the flexibility to enter and exit the scheme at any time. These funds offer tax-efficient returns because of the indexation benefit offered by debt funds,” Singh added.

SBI TMF Risk

The TMFs launched by SBI MF carry moderate risk, as per the scheme’s Riskometer. This means the principal invested in these schemes would be at moderate risk.

Application price

SBI MF said that the minimum application amount required is Rs. 5,000 and in multiples of Rs. 1 thereafter.

Fund Manager

Dinesh Ahuja is the fund manager of these schemes.

Key Dates

  • New Fund Offer for SBI CRISIL IBX Gilt Index – June 2036 Fund will open on Thursday, September 22, 2022 and close on Wednesday, September 28, 2022.
  • NFO for SBI CRISIL IBX Gilt Index – April 2029 Fund and SBI CRISIL IBX SDL Index – September 2027 Fund will open on Monday, September 26, 2022, and close on Monday, October 3, 2022.

(Disclaimer: The above article is for information purposes only. Mutual Fund Investments are subject to market risks. You should all scheme-related documents carefully and consult a financial advisor before investing.

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