Canara Robeco Mutual Fund has introduced Canara Robeco Banking and PSU Debt Fund. The new fund offer opened for subscription on July 29 and will close on August 12, 2022.
It is an open-ended debt scheme that would predominantly invest in debt instruments of banks, public sector undertakings, public financial institutions, and municipal bonds.
Being an open-ended debt scheme, the scheme would be open for subscription on an on-going basis, effective, on or before August 29.
Before we proceed, let us first deconstruct the concept of a new fund offer.
New Fund Offer
A New Fund Offer (NFO) is the process through which an asset management company (AMC) creates a new fund on a first-subscription basis to facilitate the purchase of securities.
The fund house collects funds from the general public through an NFO in order to buy securities such as equity shares, bonds, and other financial instruments on the market. As a newcomer to the market, NFO is less expensive than the current funds.
Fund Overview
According to the press release, Canara Robeco Banking and PSU Debt Fund would be an actively managed scheme which would endeavour to invest in high-grade assets, primarily AAA-rated bonds of banks and PSUs.
The new fund would aim to manage duration and capture opportunities in the interest rate cycle and mispricing on the yield curve. The benchmark index of the fund is the CRISIL Banking and PSU Debt Index.
Mr. Avnish Jain, Head Fixed-Income is the fund manager for Canara Robeco Banking and PSU Debt Fund.
Fund Objective
To generate income and/or capital appreciation through a portfolio of high quality debt and money market instruments issued by entities such as Banks, Public Sector Undertakings (PSUs), Public Financial Institutions (PFIs) and Municipal Bonds. However, there is no assurance that the objective of the fund will be realised, according to AMC.
Asset Allocation
The overall allocation for the scheme would comprise 80-100 percent of the portfolio to be invested in bonds and money market instruments issued by banks, PSUs, PFIs and municipal bonds, while 0-20 percent in debt (including G-secs/SDLs) and money market instruments issued by entities other than banks, PFIs, PSUs and municipal bonds and 0-10 percent in the units issued by REITs and InvITs.
Ten banking & PSU debt funds that demonstrated best performance in past three years
Name of Funds | 3-Year Returns(%) |
UTI Banking & PSU Debt Fund | 6.97 |
Edelweiss Banking and PSU Debt Fund | 6.7 |
IDFC Banking & PSU Debt Fund | 6.42 |
Nippon India Banking & PSU Debt Fund | 6.31 |
HDFC Banking and PSU Debt Fund | 6.27 |
Aditya Birla SL Banking & PSU Debt | 6.25 |
Kotak Banking and PSU Debt Fund | 6.23 |
DSP Banking & PSU Debt Fund | 6.15 |
Axis Banking & PSU Debt Fund | 6.1 |
PGIM India Banking & PSU Debt Fund | 6.07 |
(Source - FundsIndia, as on August 8, 2022)
Mr. Avnish Jain, Fixed Income and Fund Manager said, “We would endeavour to maintain a conservative portfolio through exposure to high credit quality issuers with low credit risk profile and follow Optimal Diversification among various issuers within Banking & PSU space.”