Axis Mutual Fund launches Axis CPSE Plus SDL 2025 70:30 Debt Index Fund

Fixed income investors have one more investment option to choose from. Axis Mutual Fund has launched the new fund offer (NFO) of Axis CPSE Plus SDL 2025 70:30 Debt Index Fund. This is a target maturity scheme tracking CRISIL IBX 70:30 CPSE Plus SDL – April 2025 benchmark. The benchmark matures on April 30, 2025. The index comprises of 70% AAA rated Central Public Sector Undertakings (CPSU) and rest SOV-rated state development loans (SDL).

The idea is to offer a portfolio with least credit risk. This is achieved by investing in bonds issued by seven CPSU and state development loans which are present in the aforementioned debt index crafted by CRISIL. The CRISIL IBX 70:30 CPSE Plus SDL – April 2025 index contains two components as on the base date of index that are rebalanced every quarter:

• AAA rated CPSE’s component (70%): Top 7 CPSE issuers shall be selected, at the time of inception of the index, based on liquidity score of the securities maturing in the eligible period for CPSE
• SDL component (30%): Top 6 SDLs with a minimum O/s of INR 1,000 Cr selected basis liquidity
The launch will facilitate passive investing for debt investors by offering them a fund that has defined tenure of close to three years, allowing them to take advantage of low duration strategies.

Target maturity index funds can be an investment option who intend to remain invested for a predefined period of time. If the investors hold the target maturity fund till maturity then they are not impacted by the changes in interest rates. This works the best when the interest rates are expected to go up. The investors can reasonably be sure about a certain level of return in a target maturity fund if they remain invested till maturity and there is no default in the interim period by any of the issuers held in the portfolio of the scheme.

Chandresh Nigam, MD & CEO, Axis AMC said, “The launch of Axis CPSE Plus SDL 2025 70:30 Debt Index Fund’ aligns with our endeavor to strengthen our passive product suite over time. By offering investors an attractive debt strategy within the passive space, we want to introduce robust products that are relevant in the current context.”

The scheme carries little credit risk and has a maturity in just above three years. That makes it attractive as investors are going to get indexation benefit for four years. This should improve the post tax returns of the investors in the high income tax bracket.

The NFO closes on January 20, 2022