Bajaj Finserv Asset Management launched the Bajaj Finserv Banking and PSU Fund focused on investments in debt instruments from banks, public sector undertakings (PSUs), and similar moderate credit risk bonds.
The fund has a relatively high-interest rate risk with moderate credit risk, Bajaj Finserv Asset Management said in a release. The fund benchmarks against the NIFTY Banking and PSU Debt Index.
The NFO runs from October 25, 2023, till November 6, 2023, with subscription resumed on or from November 15, 2023. Investors can participate with a minimum investment of Rs. 1,000. The release said the fund aims to offer investors fixed-income opportunities with high credit quality. The fund has no entry load and no exit load.
The fund aims to navigate the yield curve, emphasising a 5-year maturity profile for optimised risk-reward in the current flat yield curve market. India's inclusion in the emerging market bond index and mean reversion of yields can offer investors reasonable mark-to-market gains for medium to long-term investments, the fund house said.
Says Nimesh Chandan, CIO of Bajaj Finserv Asset Management, said, "The fund would maintain high credit quality and the allocation would comprise of 80 per cent in high credit quality Bonds of Banks and PSU companies and 20 per cent in sovereign and other high credit quality bonds."
Ganesh Mohan, CEO at Bajaj Finserv Asset Management, highlights the fund's suitability for those seeking fixed-income opportunities within the banking and PSU sector and those who want relatively stable investment options for their capital.
The fund will allocate 80 per cent to 100 per cent investments to debt and money market instruments from banks, PSUs, Public Financial Institutions, and Municipal Bonds, with a low to moderate risk profile.
An allocation of 0-20 per cent can go to debt and money market securities issued by entities other than the issuers mentioned above. They also have a low to moderate risk profile. Units issued by Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) can be allocated a maximum of 10 per cent.
In this category, there are 22 other funds listed on the Association of Mutual Funds in India (AMFI) website, which has an average return of 6.97 per cent in one year and 4.80 per cent in three years. Over five years, the average return is 7.19 per cent.