JM Financial Mutual Fund announced the launch of the JM Corporate Bond Fund, an open-ended debt scheme tracking the CRISIL Corporate Bond Fund BIII Index constituents. The scheme opened for public subscription on March 06, 2023, and will close on March 20, 2023.
Q. What kind of mutual fund scheme is this?
This kind of open-ended index fund scheme aims to generate returns commensurate with the performance of the CRISIL Corporate Bond Fund BIII Index. This is a relatively high-interest rate risk and moderate credit risk scheme and is best suited for investors seeking income over the short to medium term. However, there is no assurance that the scheme’s investment objective will be realized.
Q. What is the main objective of investing in this fund?
The scheme’s investment objective is to generate income through investing predominantly in AA+ and above-rated corporate bonds while maintaining the optimum balance of yield, safety and liquidity. Investors are required to read all the scheme-related information set out in the offer document carefully and also note that there can be no assurance that the investment objectives of the scheme will be realized. The scheme does not guarantee/indicate any returns.
Q. How may one invest in this fund?
Investors can invest under the scheme with a minimum investment of ₹5000 per plan/option and in multiples of any amount thereafter. The additional investment amount is ₹1000 and in multiples of any amount, thereafter. However, there is no upper limit for investment.
The minimum investment is applicable at the respective plans/options/sub-options level, i.e., growth, income distribution cum capital withdrawal (IDCW).
Under normal circumstances, the asset allocation of the scheme will be as follows:
|Instruments||Risk Profile||Minimum Allocation (% of total assets)||Maximum Allocation (% of total assets)|
|Corporate Bonds (AA+ and above rated)||Low to Medium||80%||100%|
|Government securities and Money Market Instruments (including units of mutual fund schemes)||Low||0%||20%|
|Units issued by REITs and InvITs||Medium to High||0%||10%|
Q. Are there similar mutual funds in the market?
To date, many asset management companies have launched index funds, thus, allowing inclined investors to avail of returns corresponding to the total returns of the securities in a particular index. These include:
|Name of the fund||Five-year returns (in %)|
|ICICI Prudential Corporate Bond Fund||6.67|
|Aditya Birla Sun Life Corporate Bond||6.57|
|Axis Corporate Debt Fund||6.42|
|Sundaram Corporate Bond||6.40|
|HDFC Corporate Bond Fund||6.39|
|Source: ET Money|
Q. How will the scheme benchmark its performance?
The benchmark index for the scheme is CRISIL Corporate Bond Fund BIII Index. The benchmark index is a better representative of the constituents and the current positioning of the scheme. Hence, the benchmark index is an appropriate benchmark for the scheme. The performance will be benchmarked to the Total Returns Variant of the Index.
Q. Are there any entry or exit loads to this scheme?
This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme. The “Exit Load” is also “Zero”. However, the fund house reserves the right to modify or change the load structure on a prospective basis.
Q. Who will manage this scheme?
Gurvinder Singh Wasan and Shalini Tibrewala would be the designated fund managers of the scheme.
Q. Does the fund contain any inherent risk?
The scheme involves “Moderate Risk” as per the details mentioned in the Scheme Information Document and is best suited to investors willing to understand that their principal will be subject to moderate risk only. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.