Aditya Birla Sun Life launches debt index fund: 5 things to know

Here are 5 things you need to know about the fund:

• The fund has a defined maturity date with a target maturity of September 30, 2026, with a diversified portfolio of AAA rated PSU bonds and SDLs that mature on or before the maturity of the scheme.
• Since it is an index fund, its portfolio will try to replicate the performance of Nifty SDL Plus PSU Bond September 2026 60:40 Index.
• The portfolio index will comprise 60% of SDLs from the top 10 states/UTs and 40% of the top 10 AAA rated PSU bonds, curated on the basis of credit quality and liquidity scores.
• It will endeavor to hold the bonds till their maturity with the aim of providing stable and predictable returns. Thereafter, there will be quarterly rebalancing and review of the index components.
• This index fund forays into the passive offering in the fixed income space of Aditya Birla Sun Life Mutual Fund. Apart from this, the fund house has launched 3 new passive funds so far in the current financial year.

a. Balasubramaniam, MD & CEO, Aditya Birla Sun Life AMC Ltd., said, “The passive debt product combines the simplicity of predicting returns, a quality portfolio of state government bonds and AAA rated PSU bonds, with target maturity periods and traditional savings instruments. Open Ended plan flexibility, better liquidity and tax benefits.”

Real returns to investors have risen with yields more attractive and inflation data cooling. With the safety and liquidity of debt funds, investors can potentially benefit from the current rise in rates. In the short and medium term investment horizon, spreads for 5 years appear attractive, especially for SDLs, as compared to government securities, which are primarily driven by higher state borrowings as a percentage of overall borrowings “

“A mix of SDL and AAA PSU bonds can provide better returns along with the safety and liquidity of an open-ended fund. A roll down strategy is being employed to take advantage of reasonable yields,” he also said.