Axis MF launches open-ended target maturity index fund: Should you invest

The expected scheme maturity date is June 30, 2034.

The investment objective of the scheme is to provide investment returns corresponding to the total returns of the securities as represented by the CRISIL IBX SDL Index – June 2034 before expenses, subject to tracking errors.

However, there can be no assurance or guarantee that the investment objective of the scheme will be achieved, Axis Mutual Fund said.

The open-ended nature of such a target maturity fund means that investors can use systematic investment and withdrawal facilities to tailor entry and exit in the fund till maturity to meet investor objectives.

Axis CRISIL IBX SDL June 2034 Debt Index Fund is a passively managed index fund which will follow a 'buy and hold' investment strategy in which debt instruments by state government securities will be held till maturity unless sold for meeting redemptions/rebalancing.

The minimum investment amount allowed is ₹5,000 and in multiples of ₹1 thereafter and there is no applicable exit load.

The minimum investment amount allowed is ₹5,000 and in multiples of ₹1 thereafter and there is no applicable exit load.

Key attributes of the CRISIL IBX SDL June 2034 Debt Index fund:

Expected opportunity: Considering the carry of the index @ 7.40-7.50% (as of Feb 21, 2024), investors may stand to benefit from the bond rally and potential spread compression.

Core allocation: As it is a relatively hassle-free solution, it can be considered by investors to have a 10-year investment horizon.

Product mechanics: As the fund is passively managed and invests in the constituents of the CRISIL IBX SDL June 2034 Index, there is no bias in security selection. Further, it is a low-cost solution for investors looking to build their core fixed-income portfolio.

As per B Gopkumar, MD & CEO, Axis AMC, the current yield curve presents material opportunities to the investor with a medium to long-term investment horizon.

"We believe that the Axis CRISIL IBX SDL June 2034 Index Fund will be a notable add-on to the investor’s passive debt portfolio. The portfolio constituents are expected to have in aggregate, key characteristics of the underlying index in terms of maturity profile and type of securities. Furthermore, the ‘held to maturity’ nature of target maturity strategies aims to minimise duration risk for investors who remain invested through the life of the fund," he said.

Investors with a medium to long-term horizon may find this fund beneficial, especially given the current yield curve dynamics.

However, as with any investment, investors must conduct thorough research and assess their risk tolerance before considering participation in the NFO.