Axis Mutual Fund launches Axis Floater Fund to tide over rising interest rates

New fund offer of Axis Floater Fund – an offering of Axis Mutual Fund will be open for subscription from July 12, 2021. The scheme can be aimed at those investors who are looking to navigate a possible rising interest rate environment and also an ideal parking solution for their investment.

The scheme will be managed by Aditya Pagaria, Fund Manager –Fixed Income, Axis Mutual Fund. The fund manager will build portfolio focusing on high credit quality bonds. At least 80% of the money will be invested in AAA rated bonds or commercial papers with A1 rating- the highest credit quality. And the rest will be invested in AA rated bonds. The scheme will target a portfolio average maturity of six to 18 months. The scheme will invest in floating rate bonds or will enter into swaps or derivative instruments to achieve floating rate payoffs.

Focus on high credit quality instruments maturity in short term, make the scheme a good choice for investors with relatively low risk profile aiming to contain the interest rate risk in a rising inflation- rising interest rate environment.

“The economic fundamentals are improving gradually and returning to normalcy. These are early signs of a pickup in demand and we believe we are the cusp of a new growth cycle,” says Chandresh Nigam, MD & CEO, Axis AMC, said The country is also likely at the bottom of the interest rate cycle and rates may see a gradual rate hike cycle in the medium term, he adds.

As economy comes out of woods and vaccinations catch up, the economic growth led inflation is expected to make a strong come back. This may force the central bankers worldwide including Reserve Bank of India to raise the interest rates. In such a scenario, it makes sense to contain the interest rate scenario and stick to good quality bonds.

The new fund offer will close on July 26, 2021. There is no exit load on investments made in the NFO period. The fund house advises investors to consider this fund if they have 12 to 18 months of time frame.