The fund combines the benefit of an FMP which has a fixed maturity and at the same time offers the flexibility provided by an ETF.
Nippon Life India Asset Management formerly known as Reliance Nippon Life Asset Management has announced the launch of Nippon India ETF Nifty CPSE Bond Plus SDL – 2024 Maturity. The New Fund Offer (NFO) opens on 3rd November 2020 and closes on 9th November 2020. The minimum investment required during NFO is Rs 5,000 and in multiples of Re 1 thereafter.
The fund combines the benefit of a fixed maturity plan (FMP) which has a fixed maturity and at the same time offers the flexibility provided by an ETF. It is one single fund which combines the benefit of Bonds and ETFs. It provides exposure to a diversified basket of AAA rated CPSE Bonds and State Development Loans which endeavours to provide stability with respect to its investment type in relatively high-grade debt instruments and benefit of mutual fund taxation at a low cost.
It is an open-ended Target Maturity Exchange Traded CPSE Bond Plus SDL Fund predominately investing in constituents of Nifty CPSE Bond Plus SDL Sep 2024 50:50 Index. AAA rated CPSE bonds and State Development Loans (SDLs) represents Nifty CPSE Bond Plus SDL Sep 2024 50:50 Index. Proportion of investments (CPSE Bonds and SDLs) will be equally divided i.e. 50% in each category at the time of index launch.
Nippon India ETF Nifty CPSE Bond Plus SDL – 2024 Maturity will follow Nifty CPSE Bond Plus SDL Sep 2024 50:50 Index and has a fixed maturity period. The maturity of the Scheme is expected to be no greater than 4 years from the date of inception of the Scheme.
The scheme endeavors to provide investment returns closely corresponding to the total returns of the securities as represented by the Nifty CPSE Bond Plus SDL Sep 2024 50:50 Index before expenses, subject to tracking errors. It aims to provide an opportunity to invest in AAA-rated CPSE Bonds and SDLs at low cost with respect to Total Expense Ratio.
Speaking on the launch, Amit Tripathi, CIO – Fixed Income, Nippon Life India Asset Management said, “Nippon India ETF Nifty CPSE Bond Plus SDL 2024 adds to our bouquet of fixed income passive investment options. Target Maturity based product with 3 to 4 years rolldown strategy, through a relatively high grade and liquid portfolio makes this an attractive investment option for all category of fixed income investors. The current steepness in the yield curve adds to the appeal of this fund at the current juncture.”
Vishal Jain, Head ETF, Nippon Life India Asset Management, said “A very unique proposition for investors as it combines the benefit of an FMP which has a fixed maturity but at the same time the ETF structure allows investors to subscribe/redeem during the life of the product either directly with the fund in a pre-defined lot size or as small as 1 unit on the NSE.”