NFO Alert: Aditya Birla Sun Life Mutual Fund launches the US Treasury 3-10 Year Bond ETFs FoFs; all you need to know

Aditya Birla Sun Life Mutual Fund announced the launch of the Aditya Birla Sun Life US Treasury 3-10 Year Bond ETFs Fund of Funds, an open-ended fund of funds scheme investing in units of ETFs focused on US Treasury Bonds having maturity between 3-10 years.

The scheme opened for public subscription on October 16, 2023, and will close on October 30, 2023. The scheme re-opens for continuous sale and repurchase within five business days from the date of allotment.

What kind of mutual fund scheme is this?

This is an open-ended fund-of-funds scheme investing in units of ETFs focused on US Treasury Bonds having maturity between 1-3 years.

Commenting on the new fund offer, A Balasubramanian, Managing Director & CEO, Aditya Birla Sun Life AMC, said, “Our new passive offerings present an opportunity for investors to potentially earn higher returns, gain currency diversity, and access a trusted treasury market. It enables the investor to tap into the unique opportunity arising from a temporary yield curve dislocation in one of the world’s largest debt markets. At ABSLAMC, we always strive to offer innovative solutions that suit our investors' changing needs.”

What is the main objective of investing in this fund?

The investment objective of the Scheme is to generate returns that are in line with the performance of units of ETFs focused on US Treasury Bonds having maturity between 3-10 years. The scheme does not guarantee/indicate any returns. There is no assurance or guarantee that the scheme's investment objective will be achieved.

This product is suitable for investors seeking:

• Long-term capital appreciation
• Investment in the units of ETFs focused on US Treasury Bonds having maturity between 3-10 years

How may one invest in this scheme?

Investors can invest under the scheme with a minimum investment of ₹100 per plan/option and in multiples of Re 1. There is no upper limit for investment.

Under normal circumstances, the asset allocation of the scheme will be as follows:

Are there similar mutual funds in the market?

To date, no asset management company (AMC) has launched any such exchange-traded fund (ETF).

How will the scheme benchmark its performance?

The performance of the scheme will be benchmarked to the performance of the Bloomberg US Treasury 3- 10-year Index. The Bloomberg US Treasury 3-10 Year Index is part of a series of indices intended to assess the U.S. Treasury market. The index underlying has fixed-rate securities with a minimum term to maturity greater than three years and less than or equal to ten years. Thus, it is considered an appropriate benchmark for the scheme.

Are there any entry or exit loads to this scheme?

This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme. The “Exit Load” would be calculated as under:

• For redemption/switch-out of units on or before 90 days from the date of allotment: 0.5% of applicable NAV.
• For redemption/switch-out of units after 90 days from the date of allotment – Nil

Who will manage this scheme?

Dhaval Joshi has been designated as the fund manager of this scheme.

Does the fund contain any inherent risk?

The scheme involves “Very High Risk” as per the details mentioned in the Scheme Information Document and is best suited to investors willing to understand that their principal will be subject to very high risk only. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.