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NEW DELHI: Tata Mutual Fund has filed the draft scheme information document for a scheme in the debt index fund category – Tata Nifty SDL Plus PSU Bond Dec 2027 60: 40 Index Fund.
It will be an open-ended passive target maturity index fund predominately investing in constituents of Nifty SDL (State Development Loans) Plus PSU Bond Dec 2027 60: 40 Index. The scheme will be benchmarked against Nifty SDL Plus PSU Bond Dec 2027 60: 40 Index (TRI) and will mature on 31 December 2027.
The investment objective of the scheme is to provide returns that closely correspond to the total returns of the securities as represented by the underlying index, subject to tracking error.
Of the two components of the index, in case of SDLs, issuers of top 6 states/UTs selected based on their outstanding amount maturing during the twelve-month period ending December 31, 2027 are selected. For every selected state/UT, SDL with the longest maturity maturing during the twelve-month period ending December 31, 2027 is selected to be part of the index. Each state/UT that is part of the SDL component is given equal weight as on the base date of the index.
For the PSU Bond component, the top 4 AAA rated government owned entities are selected based on their outstanding amount maturing during the twelve-month period ending December 31, 2027. Instrument selection with respect to maturity and weightage is similar to SDLs selection. Bonds only with plain vanilla with fixed coupon and fixed maturity and that are listed and traded on NSE and/or BSE are selected.
Index will be reviewed at the end of each calendar quarter.
The tentative portfolio is given considering data cut-off date of 28 October 2021. Some of the issuers include Uttar Pradesh Government, Karnataka Government, Power Finance Corporation Limited and Indian Railway Finance Corporation. The yield to maturity (YTM) of the tentative portfolio consisting of 10 securities belonging to 6 states/UTs and 4 government owned entities is about 6.27%, as per the draft SID.
This is the first fund in the target maturity category for the fund house.
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