Axis MF eyes Rs 100 crore from new SDL-based fund of funds

Axis Mutual Fund, one of the fastest-growing fund houses, on Thursday launched a new fund offer targeted at state development loans (SDL)-based ETF and hopes to mop up at least Rs 100 crore from issue

Axis Mutual Fund, one of the fastest-growing fund houses, on Thursday launched a new fund offer targeted at state development loans (SDL)-based ETF and hopes to mop up at least Rs 100 crore from the issue.

The Axis AAA-bond plus SDL ETF 2026 maturity fund of funds has a maturity date of April 30, 2026, and is an extension to the Axis AAA-bond plus SDL ETF-2026 launched this May and matures in 2026, the fund house said.

The offering aims to provide a passive long-term debt investment solution for investors with a five-year investment horizon, Axis MF Managing Director and Chief Executive Chandresh Nigam said.

He added that the fund of funds will deploy its assets predominantly in the underlying ETF that invests across AAA-corporate bonds and SDLs (state government debt).

The company spokesman told PTI that they have a target to mop up at least Rs 100 crore from the new fund offer.

The debt space has seen a slew of target maturity products across various maturities and asset types. The idea of having an open-ended structure with a defined maturity is an evolution brought on by passive products, Nigam said.

"With this fund of fund, we hope to expand the availability of such solutions to investors without demat accounts and prefer to deal with the AMC (asset management company) directly," said Nigam explaining the rationale for the new fund offer that is an extension of its existing fund.

The 5-year AAA-rated bonds space offers an opportunity to investors and has seen yields rise by over 50 basis points (bps), given the sell-off since December 2020.

Being a passive fund, the fund is low cost and hassle-free for investors looking to build their core fixed-income portfolio, and it works like a traditional mutual fund. Hence, investors can invest regularly without a demat account.

The fund of funds is an ideal solution for investors who wish to participate in the passive strategy and who prefer to deal with the mutual fund directly similar to traditional mutual funds.

The fund provides investors with a defined tenure of about 5 years, especially on the AAA and SDL curves that have seen the largest retracement, as markets have begun factoring improving macroeconomic data and the gradual end of the accommodative monetary policy, he said.