Home / Mutual Funds / News /  ICICI Prudential Mutual Fund launches two target maturity funds

ICICI Prudential Mutual Fund has launched two target maturity funds, one based on G-Secs or government of India bonds and another based on SDLs or state government bonds. These are ICICI Prudential Nifty G-Sec Dec 2030 Index Fund which matures in 2030, and ICICI Prudential Nifty SDL Dec 2028 Index Fund – which matures in 2028, respectively.

The Nifty G-Sec Dec 2030 Index Fund NFO (new fund offer) will be open from October 4 to 10 and the Nifty SDL Dec 2028 Index Fund NFO will be open from October 4 to 11. The two funds will invest in the constituents of their respective underlying indices and hold them till maturity. 

The Nifty G-Sec Dec 2030 Index has a yield to maturity (YTM) of 7.36%. That is, if you invest in the index and hold till maturity, the index will return 7.36%. Your fund return will correspond to the index return subject to tracking error, if any, and the expense ratio. The Nifty SDL Dec 2028 Index has a YTM of 7.64%. 

Target maturity funds are a type of debt funds that have a defined maturity. Today, all existing target maturity invest only in the highest credit quality debt papers comprising G-Secs, SDLs and AAA-rated corporate bonds. This makes them safe on the credit quality front. If you remain invested in them until maturity, you are also shielded from interest rate risk. Also, as with other debt funds, target maturity funds too, enjoy lower taxation compared to fixed deposits. Your return from a target maturity fund (long-term capital gains), when you redeem your units after holding them for over 3 years gets taxed at a flat rate of 20% plus 4 % cess after applying indexation benefit. 

Speaking on the product launch, Chintan Haria, Head, Product Development and Strategy, ICICI Prudential AMC said, “In a rising interest rate scenario, investors looking for fixed duration returns within a specific maturity bucket can consider investing in target maturity index funds. If held for more than three years, investors get the benefit of indexation which significantly increases the post-tax returns of those in higher tax brackets."

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