Bandhan Mutual Fund has recently introduced its newest offering, the Bandhan Long Duration Fund. This open-ended, long-term debt scheme aims to invest in a diversified portfolio of debt and money market securities, ensuring a Macaulay duration of over seven years.
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While the scheme's primary objective is to generate optimal returns over the long term, it's crucial to note that there's no guarantee of achieving this objective, as stated by the fund house.
The new fund offer (NFO) scheme will be available till March 18, 2024.
Plans option
The scheme offers regular and direct plans, each with separate net asset values (NAVs). Both plans provide an Income Distribution cum Capital Withdrawal Option (IDCW) and a growth option.
The IDCW option under both plans further offers a payout of the IDCW option, reinvestment of the IDCW option, and sweep/transfer of the IDCW plan.
Asset allocation
Regarding asset allocation, the Bandhan Long Duration Fund will invest in debt securities (including G-Sec and securitised debt) and money market instruments, with the Macaulay duration of the portfolio exceeding 7 years.
The indicative allocation ranges from 0% to 100% of total assets, with a risk profile categorised as low to moderate.
Minimum investment
The minimum investment allowed is ₹1,000 and in multiples of ₹1 thereafter.
Investment process
The investment process for the Bandhan Long Duration Fund is accessible through licensed mutual fund distributors, investment advisors, online platforms, and directly on the official Bandhan Mutual Fund website at https://bandhanmutual.com/nfo/bandhan-long-duration-fund/.
Risk structure
The Potential Risk Class Matrix indicates a relatively low credit risk (Class A), moderate credit risk (Class B), and relatively high interest rate risk (Class C).
The fund's risk profile falls under Class IIIA, indicating relatively high-interest rate risk and relatively low credit risk.
A look at returns of similar funds
| Fund Name | 1-year | 3-year | 5-year | 10-year |
| SBI Long Duration Fund - Direct Plan - Growth | 11.50% | - | - | - |
| HDFC Long Duration Debt Fund - Direct Plan - Growth | 11.31% | - | - | - |
| Aditya Birla Sun Life Long Duration Fund - Direct Plan | 10.60% | - | - | - |
| Nippon India Nivesh Lakshya Fund - Direct Plan - Growth | 10.38% | 6.06% | 8.53% | - |
| ICICI Prudential Long Term Bond Fund - Direct Plan | 9.53% | 5.34% | 7.40% | 8.89% |
(Source: Moneycontrol)
Investment considerations
Investors looking to capitalise on potential opportunities in the changing interest rate environment may find this fund appealing, especially if they anticipate a decline in the current near-peak interest rates due to structural improvements in the economy, the fund house said.
In a statement regarding the launch, Vishal Kapoor, CEO of Bandhan AMC, highlighted the unique phase of the macroeconomic environment.
He emphasised that a combination of structural and cyclical improvements is likely to lead to lower deficits, reduced inflation, and increased foreign investments in Indian bonds.
These developments, Kapoor believes, will create an enticing opportunity for bond investments.
However, investors should be aware that the long duration of the fund may result in higher volatility compared to other debt fund categories.
Investors considering the Bandhan Long Duration Fund should carefully evaluate their risk tolerance and investment goals before deciding to invest.
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