NEW DELHI: Axis Mutual Fund, an asset management company (AMC), announced on Friday the launch of a new fund offering (NFO) for a floating fund, an open-ended debt program investing primarily in instruments at variable rate. The NFO will open for subscription on July 12.
Axis Floater Fund is an actively managed portfolio of floating rate instruments and fixed rate bonds which are exchanged for floating rate features through swaps. Variable rate strategies aim to manage interest rate risks by investing in bonds whose coupon is linked to market movements.
The fund aims to provide solutions for short-term investors looking to navigate a rising interest rate environment, as well as an ideal parking solution for their investment. The fund will be managed by Aditya Pagaria, Fixed Income Fund Manager, Axis Mutual Fund.
Ideally, a floating rate bond offers a market-linked return and is ideal for those looking to hedge against interest rate risk in a rising rate environment.
According to the company, the fund offering will be crafted with a dynamic mix of high quality instruments and AA issuers. “It aims for an average maturity of the portfolio of 6 to 18 months. This makes it suitable for investors looking to park excess funds for the short term or for those looking to limit interest rate risk in their debt portfolio, ”said the AMC.
The new fund will target 80% AAA or A1 rated papers as well as a 20% allocation to AA issuers in order to seize opportunities in the debt market.
Announcing the launch of the NFO, Chandresh Nigam, Managing Director and CEO of Axis AMC, said: “Economic fundamentals are gradually improving and returning to normal. These are the first signs of a recovery in demand and we believe we are on the cusp of a new growth cycle. The country is also likely at the bottom of the interest rate cycle and we expect rates to experience a gradual rate hike over the medium term. With the launch of this fund, we believe we will provide an effective solution for short-term investors looking to navigate a possible rising rate environment. “
The minimum investment in the NFO would be ₹5,000 and in multiples of Re 1, thereafter. There will be no exit charge for this fund.
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