BackNFO Alert: Bajaj Finserv Mutual Fund launches Bajaj Finserv Banking and PSU Fund; all you need to know
Bajaj Finserv Mutual Fund announced the launch of the Bajaj Finserv Banking and PSU Fund. The scheme opened for public subscription on October 25, 2023, and will close on November 06, 2023.
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Bajaj Finserv Mutual Fund announced the launch of the Bajaj Finserv Banking and PSU Fund. The scheme opened for public subscription on October 25, 2023, and will close on November 06, 2023. The scheme re-opens for continuous sale and repurchase within five days from the date of allotment.
What kind of mutual fund scheme is this?
This is an open-ended debt scheme predominantly investing in debt instruments of banks, public sector undertakings, public financial institutions, and municipal bonds with relatively high-interest rate risk and moderate credit risk.
The investment opportunity has been designed to offer investors an avenue for income generation. This fund intends to give investors the opportunity to invest in fixed income while ensuring that their investment portfolios have a high level of credit quality.
Speaking on the launch of the product, Ganesh Mohan, CEO, Bajaj Finserv Asset Management said, “Our Banking and PSU Fund opens the door for investors to tap into the fixed income investment opportunities available in the banking and PSU space while enjoying the benefits of professional fund management. It is suitable for investors who want relatively stable investment options for their capital. Investors who are interested in diversifying their portfolio across various Debt Investments apart from other traditional banking products may also find this fund an attractive proposition."
What is the main objective of investing in this fund?
The investment objective of the scheme is to generate income by predominantly investing in debt and money market securities issued by banks, public sector undertakings (PSUs), public financial institutions (PFIs), municipal bonds and reverse repos in such securities, sovereign securities issued by the Central Government and State Governments, and/or any security unconditionally guaranteed by the Government of India. There is no assurance or guarantee that the investment objective of the scheme will be achieved.
Nimesh Chandan, CIO, Bajaj Finserv Asset Management said, “The fund would maintain high credit quality and the allocation would comprise of 80% in high credit quality Bonds of Banks and PSU companies and 20% in sovereign and other high credit quality bonds. The Banking and PSU Fund seeks to offer investors a thoughtful combination of good credit quality, performance potential, and market expertise. It presents a compelling case for investors looking to diversify their fixed-income portfolios and explore opportunities in the evolving investment landscape."
How may one invest in this scheme?
Investors can invest under the scheme with a minimum investment of ₹1000 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:
| Instruments | Indicative allocations (% of total assets) | Risk Profile | |
Minimum | Maximum | ||
Debt and money market instruments of banks, Public Sector Undertakings, Public Financial Institutions and Municipal Bonds | 80 | 100 | Low to Moderate |
Debt and money market securities (including government securities) issued by entities other than banks, Public Sector Undertakings, Public Financial Institutions and Municipal Bonds | 0 | 20 | Low to Moderate |
Are there similar mutual funds in the market?
To date, many asset management companies (AMCs) have launched such banking and PSU mutual funds, thus, allowing inclined investors to avail of returns corresponding to the total returns of the securities in this particular index. These include
Name of the fund | Ten-year returns (in %) |
Aditya Birla Sun Life Banking & PSU Debt Fund | 8.36 |
ICICI Prudential Banking & PSU Debt Fund | 8.20 |
Edelweiss Banking and PSU Debt Fund | 8.12 |
Kotak Banking and PSU Debt Fund | 8.00 |
SBI Banking and PSU Fund | 7.82 |
DSP Banking & PSU Debt Fund | 7.80 |
Axis Banking & PSU Debt Fund | 7.75 |
Bandhan Banking & PSU Debt Fund | 7.70 |
HSBC Banking and PSU Debt Fund | 7.40 |
LIC MF Banking & PSU Debt Fund | 7.21 |
Invesco India Banking & PSU Debt Fund | 6.98 |
Sundaram Banking & PSU Debt Fund | 6.94 |
| Source: AMFI (Data as of October 25, 2023) | |
How will the scheme benchmark its performance?
The scheme benchmark would be NIFTY Banking and PSU Debt Index. The NIFTY Banking and PSU Debt Index is an aggregate index. This index comprises a series of sub-indices namely:
• Nifty All Maturity CD Index;
• Nifty Banking & PSU Short Duration Bond Index;
• Nifty Banking & PSU Medium Duration Bond Index;
• Nifty Banking & PSU Medium to Long Duration Bond Index.
This is representative of all maturities for the given asset class. The underlying indices are well-diversified, broad-based, and investible. The underlying indices are based on a well-defined, market-relevant, and rules-based framework. The benchmark index is a transparent and objective indicator of corporate bond market performance. The benchmark index is rebalanced and reconstituted on a quarterly basis.
The composition of the aforesaid benchmark is such that, it is most suited for comparing the performance of the scheme. The trustees may change the benchmark in the future if a benchmark better suited to the investment objective of the scheme is available.
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 also be “Nil".
Who will manage this scheme?
Nimesh Chandan and Siddharth Chaudhary will be looking into the equity aspects of the scheme.
Does the fund contain any inherent risk?
The scheme involves “Moderate 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.
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