Nippon India Mutual Fund has unveiled its Fixed Maturity Plan (FMP) XLVI Series 2 with a tenure of 367 days. The scheme's investment strategy involves a diversified portfolio, encompassing central and state government securities, along with other fixed income and debt securities. The new fund offer (NFO) of the scheme will be available till February 29, 2024.
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The primary objective is to limit interest rate volatility, although the fund acknowledges that there is no guarantee of achieving this goal.
The FMP, classified as a close-ended scheme, indicates relatively low interest rate risk and relatively high credit risk.
The benchmark for the scheme is set as the CRISIL Short Term Bond Index, Nippon India Mutual Fund said.
During the NFO period, investors can purchase units, and once acquired, they can only be traded on the stock exchange where listed.
Importantly, no redemption or repurchase of units is permitted before the scheme's maturity, Nippon mentioned in the fund document.
"Transparency and disclosure are key aspects of this scheme, with daily Net Asset Value (NAV) declarations available on AMFI's website and Nippon India Mutual Fund's official site. The fund commits to fortnightly and monthly portfolio disclosures, along with the communication of annual reports and half-yearly unaudited financial results to unitholders," it said.
The scheme imposes no entry load, and as it is set to be listed on recognised stock exchanges, there is no exit load.
The minimum application amount stands at ₹5,000 and in multiples of ₹1 thereafter.
Investors can choose from two plans/options: growth option and income distribution cum capital withdrawal plan – payout option, with distribution subject to the availability of distributable surplus.
Regarding maturity, no redemption or repurchase of units is allowed before maturity.
Investors looking to exit can do so by selling their units through stock exchanges.
Redemption proceeds will be dispatched to unitholders within three business days from the maturity date. Additionally, investors have the option to switch redemption proceeds into other eligible schemes of Nippon India Mutual Fund, the fund house said.
In terms of investment strategy, the scheme employs derivatives for portfolio hedging, with gross investments not exceeding 100% of the net assets.
Investments in rated fixed income securities and unrated securities require prior approval. The scheme encompasses money market instruments, corporate bonds, and other permitted debt instruments, the mutual fund house said.
Repo transactions and derivatives form part of the investment strategy, with a focus on tri-party repo on government securities or treasury bills and adherence to RBI guidelines. The gross exposure to repo transactions in corporate debt securities is capped at 10% of the net assets, it added.
Potential investors should carefully assess their risk tolerance and investment objectives before considering participation in the NFO.
Consulting with financial advisors and reviewing the scheme's offer document is advisable for a comprehensive understanding of associated risks and potential returns.
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