Edelweiss Mutual Fund House launched India’s first passive short-duration index fund, the Edelweiss CRISIL IBX 50:50 Gilt Plus SDL Short Duration Index Fund on January 27, 2023. Those looking to park their money in debt fund instruments may invest their money through the New Fund Offer (NFO) open till February 10, 2023.
The idea behind parking money in this open-ended index fund is to replicate CRISIL IBX 50:50 Gilt Plus SDL Short Duration Index by investing in a diversified portfolio of Indian government bonds and SDLs, subject to tracking errors. The scheme may also invest in money market instruments to meet liquidity requirements, in compliance with regulations. Money Market Instruments will include only treasury bills and government securities having a residual maturity of up to one year, Tri-Party Repos and any other like instruments as specified by the Reserve Bank of India from time to time. However, there is no assurance that the investment objective of the scheme will be realized as the scheme does not assure or guarantee any returns.
The press release shared by the company says, “Passive duration management in these funds is consistent and free from any bias. The lower cost will add up in the returns. This cost-effective index fund can be an ideal option for investors looking to include fixed income in their portfolio as a component of their asset allocation strategy. Edelweiss CRISIL IBX 50:50 Gilt Plus SDL Short Duration Index Fund will invest in 50 per cent Indian Government Bonds (IGBs) and 50 per cent State Development Loans (SDLs). The G-Sec portion will be constructed by selecting the most liquid government bonds with a minimum outstanding of ₹10,000 crores falling in duration buckets starting from one to five years. The SDL portion will be constructed by first selecting the most liquid state issuers falling in each of the eligible duration buckets and then by selecting the most liquid ISIN from each of these buckets with a minimum outstanding of Rs. 500 crores. The index will be rebalanced every quarter with an effective date as the first business day of the month.”
The minimum subscription amount investors may put in this relatively high-interest rate risk and relatively low credit risk instrument is ₹5000. The Net Asset Value (NAV) has been capped at ₹10 per unit during the NFO period. The scheme has been labelled as “Moderately Risky” as per the details mentioned in the Scheme Information Document and is best suited to investors willing to stay invested for a long period. However, investors must consult their financial advisers if in doubt about whether the product is suitable for them
Commenting on the launch of the NFO, Radhika Gupta, MD and CEO, Edelweiss Asset Management Companysaid, “We are proud to announce the launch of our new passive index fund, the Edelweiss CRISIL IBX 50:50 Gilt Plus SDL Short Duration Index Fund, which is poised to become the game-changer in the industry. With many active debt funds underperforming their benchmark due to high costs and biased duration calls, this fund offers better predictability on asset allocation, credit quality, and duration, and is a low-cost substitute over other active funds for short-term investments. As a leader in the passive debt Fund space, Edelweiss MF takes great pride in launching this innovative yet simple investment solution for our investors, which paves the way for an entirely new category that can yet again disrupt the debt passives category.”
The working of this scheme would be taken care of by two fund managers, Dhawal Dalal and Rahul Dedhia. There are no entry and exit loads applicable though the fund house reserves the right to revise the load structure from time to time. Such changes will become effective prospectively from the date such changes are incorporated.