Invesco Mutual Fund launches Invesco Medium Term Fund
Premium- The fund is benchmarked to CRISIL Medium Term Debt Index and will be managed by Vikas Garg and Krishna Cheemalapati. It will not have an exit load
Invesco Mutual Fund on uesday announced the launch of its medium-term fund. The new fund offer (NFO) for the scheme will run from 29 June to 13 July. Being an open-ended scheme, it will be available for subscription thereafter as well.
The scheme will focus on debt with a maturity of three-five years. A presentation for the scheme emphasized the attractiveness of debt of this tenor taking the yield curve into account. A steep yield curve denotes higher yields being offered for investments of a longer tenor.
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The presentation further added that the credit ratio (the ratio of rating upgrades to downgrades) has improved in FY 2021-22, but spreads are still elevated between AAA and AA bonds. It further highlighted that within a rating category yields are highly dispersed. For instance, they go from 4.45% to 8.24% for 2023 maturity papers, suggesting the presence of risk in the system and making active selection of bonds important. "We feel high quality ‘AAA’ bonds and controlled & selective exposure to ‘AA’ rated bonds can work well in an environment of high risk aversion," Invesco said. The fund will allocate 75-85% of its assets to AAA bonds, sovereign debt and cash and equivalents. The balance will be placed in AA bonds.
Saurabh Nanavati, chief executive officer, Invesco Mutual Fund said, “If you look at the current fixed income markets, the yield curve has steepened during pandemic; at the short end, yields have moved sharply lower on account of ample systemic liquidity & accommodative monetary policy stance; while the long end of the curve has still remained elevated due to higher fiscal concerns, though anchored by RBI through various tools like Government Securities Acquisition Program (G – SAP). With this backdrop in mind, we believe the 3- 5 years segment which offers high accrual presents itself as an attractive investment opportunity from risk-reward perspective."
The fund is benchmarked to CRISIL Medium Term Debt Index and will be managed by Vikas Garg and Krishna Cheemalapati. It will not have an exit load.
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