Nippon India Mutual Fund announced the launch of the Nippon India Fixed Horizon Fund - XLV - Series 1, a closed-ended income fund investing in the CRISIL Medium Term Debt Index constituents. The scheme opened for public subscription on February 28, 2023, and will close on March 02, 2023.
Q. What kind of mutual fund scheme is this?
This kind of debt scheme aims to generate returns commensurate with the performance of the CRISIL Medium Term Debt Index. However, there is no assurance that the scheme’s investment objective will be realized. This is a relatively high interest rate risk and relatively low credit risk scheme.
Q. What is the main objective of investing in this fund?
The investment objective of the scheme is to seek to generate returns and growth of capital by investing in a diversified portfolio of the following securities maturing on or before the date of maturity of the scheme with the objective of limiting interest rate volatility –
- Central and state government securities and
- Other fixed income/ debt securities
However, there can be no assurance or guarantee that the scheme’s investment objective will be achieved.
Q. How may one invest in this fund?
The scheme offers units of Rs. 10 each. Investors can invest under the scheme with a minimum investment of ₹5,000 and in multiples of Re 1, thereafter. The scheme offers the following plans/options under the Direct Plan and Regular Plan:
- Growth Option
- Income distribution cum capital withdrawal plan – payout option.
However, the distribution of IDCWs will be subject to the availability of distributable surplus. The IDCW amounts can be distributed out of investors’ capital (Equalization Reserve), which is part of the sale price that represents realized gains. Trustees reserve the right to declare an IDCW during the interim period.
Under normal circumstances, the asset allocation (% of Net Assets) of the scheme's portfolio will be as follows:
| Instruments | Indicative Allocation (% of Total assets) | Risk Profile | |
| Maximum | Minimum | ||
| Money Market Instruments | 10 | 0 | Low |
| Government securities/State Development Loans (SDLs) & Debt Instruments | 100 | 90 | Medium to Low |
The scheme will invest in securitised debt which may be up to 40% of the debt portfolio of the scheme.
Q. Are there similar mutual funds in the market?
Many asset management companies have launched such funds in the past. Some of them include:
| Name of the fund | Three-month returns (in %) |
| UTI Ultra Short-Term Fund | 3.04 |
| WhiteOak Capital Ultra Short-Term Fund | 2.68 |
| Baroda BNP Paribas Ultra Short Duration Fund | 1.71 |
| ICICI Prudential Ultra Short-Term Fund | 1.71 |
| DSP Ultra Short Fund | 1.70 |
| Tata Ultra Short-Term Fund | 1.67 |
| HSBC Ultra Short Duration Fund | 1.66 |
| Bank of India Ultra Short Duration Fund | 1.65 |
| Canara Robeco Ultra Short-Term Fund | 1.59 |
| Source: MoneyControl | |
Q. How will the scheme benchmark its performance?
The series under the scheme intends to have similar instruments as constituted in CRISIL Medium Term Debt Index. The portfolios are similar not only in terms of the construct but also in terms of the risk-return parameters in question. Using this benchmark shall provide the investor with an independent and representative comparison with the fund portfolio. The trustee reserves the right to change the benchmark for evaluation of the performance of the scheme from time to time in conformity with the investment objectives and appropriateness of the benchmark subject to SEBI (MF) Regulations, and other prevailing guidelines, if any.
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”. No redemption/repurchase of units shall be allowed prior to the maturity of the scheme. Investors wishing to exit may do so through stock exchange mode.
Q. Who will manage this scheme?
Anju Chhajer is the fund manager for 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 at moderate risk. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.
