Should you invest in Trust Mutual Fund’s maiden new fund offer?1 min read . Updated: 13 Jan 2021, 05:11 PM IST
- The NFO is suitable for investors who seek regular income over the short to the medium term. The investors’ principal carries a moderate risk
Trust Mutual Fund has launched its maiden new fund offer (NFO) — TrustMF Banking and PSU Debt Fund — an open-ended scheme predominantly investing in debt instruments of banks, public sector undertakings, public financial institutions and municipal bonds. The fund will be managed by Anand Nevatia and Sandeep Bagla. An open-ended fund is available for subscription and repurchase on a continuous basis and do not have a fixed maturity period.
According to the company, the NFO is suitable for investors who seek regular income over the short to the medium term. Th
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The NFO will open for subscription from 15 January and close on 27 January 2021, and the minimum investment amount in the fund is ₹1,000.
“We want to make the process of investment in fixed income securities more systematic, transparent and objective. We want to communicate the mechanism of this process to our distributors and investors. For this we have tied up Crisil who will be our strategic knowledge partner and that will help us make our investment process more robust," said Sandeep Bagla, chief executive officer of Trust AMC and the co-fund manager of the TrustMF Banking & PSU Debt Fund.
The fund house is currently following a roll-down strategy with a target maturity of 3.5 years as it believes the segment is offering decent spread over three-year instruments. The strategy is subject to change depending on investment opportunities, it said.
A roll-down strategy involves creating a portfolio of a certain maturity and allowing the maturity to fall, till the fund hits the target date. Trust Mutual Fund aims to benefit from steepness in the three-four year curve.
“Banking and PSU debt funds came into prominence when there was a huge turmoil in the debt market in India. The turmoil in the market has subsided now, but at the same time these funds continue to be attractive for people who are looking for high-quality papers and are comfortable with slightly lower returns," said Suresh Sadagopan, founder, Ladder 7 Financial Advisories, a Sebi-registered investment adviser.
However, according at Sadagopan, he does not recommend NFOs to investors, as there are around 10-15 products available on the same theme with proven track record in terms of performance.