UTI Mutual Fund on Friday, January 19, launched two index-based debt funds: UTI Nifty 5 yr Benchmark G-Sec ETF and UTI Nifty 10 yr Benchmark G-Sec ETF. The new fund offers (NFOs) are available for subscription till January 23. The schemes will reopen for continuous sale and repurchase within five business days from the date of allotment, the mutual fund house said.
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The schemes are part of exchange traded funds (ETFs) and will be managed by Jaydeep Bhowal.
NFOs in details
UTI Nifty 5 yr Benchmark G-Sec ETF
The UTI Nifty 5 yr Benchmark G-Sec ETF is an open-ended scheme replicating/tracking the Nifty 5-year Benchmark G-Sec Index with a relatively high interest rate risk and relatively low credit risk. The scheme will be benchmarked against the same index.
The minimum initial investment amount in the scheme allowed during NFO period is ₹5,000 and in multiples of ₹1 thereafter. Subsequent minimum investment amount is ₹1,000 and in multiples of ₹1 thereafter.
The scheme will allocate 95-100% in securities covered by Nifty 5-year Benchmark G-Sec Index and 0-5% in money market instruments, including tri-party repo on government securities or T-bills, cash and cash equivalents or liquid category of mutual fund.
UTI Nifty 10 yr Benchmark G-Sec ETF
The UTI Nifty 10 yr Benchmark G-Sec ETF is an open-ended scheme replicating/tracking Nifty 10-year Benchmark G-Sec Index with a relatively high interest rate risk and relatively low credit risk.
The scheme will be benchmarked against the Nifty 10-year Benchmark G-Sec Index. The scheme will invest 95-100% in securities covered by Nifty 10-year Benchmark G-Sec Index and 0-5% in money market instruments, including tri-party repo on government securities or T-bills, cash and cash equivalents or liquid cash and cash equivalents or liquid category of mutual fund.
Investment considerations
While the launch of UTI Mutual Fund's Nifty-based G-Sec ETFs opens up avenues for investors, the decision to invest in the NFOs should be based on careful consideration of one's financial goals and risk tolerance.
If we look at the year 2023, there has been notable inflows in both ETFs and index funds.
Chintan Haria, Principal, Investment Strategy, ICICI Prudential AMC, in a recent interaction with CNBC-TV18.com, said investors should track error and expense ratio before investing in passive funds.
"A lower tracking error indicates better replication of the underlying benchmark, while a lower expense ratio is more favourable for investors," he told CNBC-TV18.com.
For long-term investors, Haria suggested considering broad-based offerings with a 500-stock universe.
Moderate to conservative investors can explore strategies like low volume and alpha low volume from a long-term perspective, he said.
As investors contemplate participating in the NFOs, Haria's perspective on the broader investment landscape adds a layer of informed decision-making.
Investors should carefully review the fund details and consider consulting financial advisors before committing to the NFOs.
(Edited by : Shoma Bhattacharjee)
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