DSP Mutual Fund launches US Treasury Fund of Fund: Should you invest?

The fund offers two plans - Regular Plan and Direct Plan, both with common portfolios.

Under each plan, investors can choose from two options: Growth or Income Distribution cum Capital Withdrawal (IDCW), which includes payout and reinvestment alternatives.

Moreover, the absence of an exit load in case of switches between Direct Plan and Regular Plan provides investors with flexibility.

The minimum application amount for the DSP UST FoF is ₹100.

The DSP UST FoF aims to capitalise on the current environment of elevated US yields, which are nearing 10 and 20-year highs.

This presents a compelling chance for investors to deploy their funds at higher interest rates, potentially earning them superior returns. Additionally, investors can benefit from mark-to-market gains from a higher duration portfolio when yields eventually decline, DSP Mutual Fund said.

One key advantage of the DSP UST FoF is its active management of duration, providing investors with the flexibility to navigate US interest rate cycles and potentially achieve better returns, the fund house said.

Given the historically higher rate hikes in the US compared to India, there is a possibility of a more significant decline in yields in the US, making active management crucial.

Sandeep Yadav, Head of Fixed Income at DSP Mutual Fund said, "This is an opportune time for investors to explore the potential stemming from elevated US Treasury yields and their potential fall. The fund's design offers investors the potential to earn better returns through the active management of interest rate cycles. DSP UST FoF is also a great option for those with future US-based expenses."

Investors seeking a safe haven during times of distress will find the DSP UST FoF appealing, as US Treasuries are typically considered a secure investment in turbulent times.

However, experts suggest investors to carefully consider their financial goals and risk tolerance before making any investment decisions.