SBI Mutual Fund has announced the launch of a new fund offer (NFO), SBI Fixed Maturity Plan (FMP)-Series 92 (91 Days). The close-ended debt scheme will be open from Wednesday, January 31, and till Monday, February 5, 2024.
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The primary objective of the SBI Fixed Maturity Plan (FMP)-Series 92 (91 Days) is to generate regular income and capital growth with limited interest rate risk.
The fund will achieve this by strategically investing in a diversified portfolio of debt instruments maturing on or before the maturity of the scheme. It's important to note that there is no guarantee that the investment objective of the scheme will be achieved, the mutual fund house said in its fund document.
With a tenure of 91 days, the NFO allows a minimum subscription amount of ₹5,000 and in multiples of ₹1 thereafter.
The risk profile is categorised as low to medium, SBI Mutual Fund said.
Fund manager
The fund manager for SBI Fixed Maturity Plan (FMP)-Series 92 (91 Days) is Ranjana Gupta.
Gupta joined SBI Mutual Fund in 2008, initially as a fixed-income dealer, and has been at the forefront of managing the scheme since its inception.
Liquidity and trading
Investors should be aware that there will be no redemption or repurchase of units allowed before the maturity of the scheme.
However, on maturity, investors can redeem their units.
The scheme is proposed to be listed on the BSE within five business days from the date of allotment. This listing will enable investors to trade on the exchange, offering an exit option.
Benchmark and asset allocation
The scheme's benchmark is the Crisil Liquid Debt Index.
The fund's assets will be allocated in debt and money market instruments, with indicative allocations ranging up to 100% of total assets.
Fees and expenses
All expenses related to the NFO, including sales and distribution fees, marketing, advertising, registrar expenses, printing, and stationery, will be borne by the asset management company (AMC).
The annual scheme recurring expenses include investment management and advisory fees, registrar and transfer agents’ fees, marketing and selling costs.
Investment considerations
Investors seeking a short-term investment horizon with a preference for relatively lower interest rate risk and a tolerance for credit risk may find the SBI Fixed Maturity Plan (FMP)-Series 92 (91 Days) appealing.
However, investors should consider several aspects before diving in.
Understanding the trend of returns versus assured returns, comprehending tax implications, aligning with the investment objective, and comparing FMPs with other fund categories form critical due diligence steps before investing are important, as per a Cleartax note.
Historically, FMPs can be seen as having one issue.
Some FMPs had high levels of concentration as they were not able to raise the required amount of assets under management (AUM) and thus could invest only in a limited number of bonds.
Additionally, as with any investment, individuals are advised to carefully consider their financial goals, risk tolerance, and investment horizon before making decisions.
(Edited by : Amrita)
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