Tata MF files with SEBI for Target Maturity Index Fund

It will be an open-ended Passive Target Maturity Index Fund investing primarily in the components of Nifty SDL (State Development Debt) plus PSU Bonds December 2027 60:40 Index. The scheme will be benchmarked against Nifty SDL Plus PSU Bond December 2027 60:40 Index (TRI) and will mature on December 31, 2027.

The investment objective of the scheme is to provide returns that closely match with the total returns of the securities represented by the underlying index, subject to tracking error.

In the case of SDLs, out of the two components of the index, issuers from the top 6 States/UTs are selected on the basis of their outstanding balances maturing during the twelve-month period ending December 31, 2027. For each selected State/UT, the SDLs with the longest maturity during the twelve-month period ending December 31, 2027 have been selected to be part of the index. Each State/UT which is part of the SDL component is given equal weightage as on the base date of the index.

For the PSU bond component, the top 4 AAA rated government-owned entities are selected on the basis of their outstanding balances that mature during the twelve-month period ending December 31, 2027. Instrument selection is similar to SDL selection with respect to maturity and weightage. Only plain vanilla bonds with fixed coupon and fixed maturity and which are listed and traded on NSE and/or BSE are selected.

The index will be reviewed at the end of each calendar quarter.

The provisional portfolio is given keeping in view the data cut-off date of 28 October 2021. Some of the issuers include Government of Uttar Pradesh, Government of Karnataka, Power Finance Corporation Limited and Indian Railway Finance Corporation. As per the draft SID, the yield of floating portfolio (YTM) consisting of 10 securities belonging to 6 states/UTs and 4 government owned entities is around 6.27%.

This is the first fund in the target maturity category for the fund house.