HDFC Mutual Fund (MF) recently launched a new fund offer (NFO) for G-Sec Index funds. One of them is Nifty G Sec Dec 2026 Index Fund and the second is Nifty G-Sec July 2031 Index Fund. The fund was launched on November 1 and will remain open till November 9.
These are target maturity funds which are also seen as an alternative to traditional debt investments.
What are target maturity funds?
Target maturity funds are passively managed debt funds that come with a specific date of maturity. They offer predictable returns if the investor stays invested until the date of maturity. Most schemes specifically invest in government securities and state government bonds. The indexation benefits are available if they are held for longer than three years.
Both these NFO-bound schemes rolled out by HDFC Mutual Fund will be managed by fund manager Vikash Agarwal, and are being offered under both regular and direct plans but give only ‘growth’ option to subscribers.
The minimum purchase amount is ₹100 and any amount thereafter with an additional purchase of ₹100.
The portfolio will comprise anywhere between 95 to 100 percent of government securities/ SDL (state development loans), etc whereas the remaining 0 to 5 percent will be money market instruments and units of liquid and debt mutual fund schemes.
Nifty G Sec Dec 2026 Index Fund: The plan has a tenor of 4.2 years. This plan seeks to measure the performance of portfolio of Government securities (G-Secs) maturing during six-month period ending December 31, 2026.
The index constituents for this mutual fund scheme will be 5.4% GS 2026, 8.15% GS 2026 and 6.97% GS 2026.
Nifty G-Sec July 2031 Index Fund: The plan has a tenor of 8.8 years. This mutual fund seeks to measure the performance of portfolio of Government securities (G-Secs) maturing during the twelve-month period ending July 31, 2031.
The index constituents for this scheme will be 6.10% GS 2031, 8.97% GS 2030 and 5.77% GS 2030.
These target maturity funds can be explored as a viable investment avenue because they are passively managed and follow the buy and hold strategy, says the AMC. Investing in G-Secs carry negligible credit risk. Also, they carry low cost and have fixed maturity, thus suits investors whose financial goals coincide with the fund's maturity.
Besides, these funds follow a roll down approach i.e., their duration risk keeps on decreasing. they are tax efficient if investors hold them for longer than 3 years and can be redeemed any time until maturity.