Home / Mutual Funds / News /  Union AMC launches Gilt Fund

NEW DELHI: Union AMC has launched the Union Gilt Fund, an open-ended debt mutual fund scheme that will invest at least 80% of its total assets in government securities across maturities. 

The new fund offer (NFO) will remain open from 18 July to 1 August. The Union Gilt Fund will be benchmarked to the CRISIL Dynamic Gilt Index and will be managed by Parijat Agrawal and Anindya Sarkar.

According to Parijat Agrawal, Head-Fixed Income, Union AMC, given the current elevated yield levels for debt instruments, this is potentially a good entry point for investors. “Sovereign securities carry the lowest level of credit risk. At current levels, it has a possible dual advantage in the form of higher accrual income, as also the possibility of capital gains as and when interest rate cycles reverse in future. Investors with a three-year horizon can also benefit from long term capital gains taxation," Agrawal said.

The scheme is labelled ‘Moderate Risk’ as per the Risk-o-meter. Under the SEBI-introduced Risk-o-meter, each scheme is labelled one of six different risk levels - Low, Moderately Low, Moderate, Moderately High, High and Very High – for depicting associated risks with a mutual fund scheme. The risk level is arrived at by taking into account several factors. In case of debt securities, the overall risk is evaluated based on their credit risk, interest rate risk and liquidity risk. 

The allotment date for the scheme is 8 August and it will re-open for ongoing sale and repurchase on 17 August. The minimum investment required is 1,000 and in multiples of Re 1 thereafter.

Data from Value Research shows that existing gilt funds (regular plan) have fetched a three-year return of 3-6% and a five-year return of 3.6-7.2%. Union AMC currently manages 18 open-ended schemes of which eight are categorised as equity schemes, six as debt, and four as hybrid schemes.

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