The fund will primarily invest in corporate bonds rated AA + and above. Some of its exposure will also be in government securities and treasury bills. The fund will invest in the entire yield curve but target modified durations will be in the range of 2 to 5 years.
One of the fastest growing fund houses in the country, ‘Mirae Asset Investment Managers India’, on Wednesday announced the launch of ‘Mirae Asset Corporate Bond Fund’. It is an open-ended debt scheme, investing mainly in corporate bonds rated AA + and above. Its NFO will open for subscription on 24 February 2021 and will close on 9 March 2021. The bond’s benchmark will be based on the Nifty Corporate Bond Index and will be managed by CIO Mahendra Jeju of Fixed Income.
The fund will primarily invest in corporate bonds rated AA + and above. Some of its exposure will also be in government securities and treasury bills. The fund will invest in the entire yield curve but target modified durations will be in the range of 2 to 5 years. This will depend on the interest rate outlook. This fund will work according to the active portfolio management policy based on a flexible interest rate strategy.
Funds feature
The fund will not currently invest in lower rating bonds or papers or perpetual (below AA rating) bonds. For now, its entire focus will be on creating a high quality portfolio based on its credit assessment process. This category has the potential to yield better risk-adjusted returns than other debt categories and traditional fixed instruments. Debt funds also get tax benefits due to holding for more than three years.
Higher income at less risk
In the current environment, investors are seeking liquidity with returns in their portfolios, said Swaroop Mohanty, CEO of Mirae Asset Investment Managers Pvt. Mirae Asset Bond Fund aims to generate income that has less risk. Also, its focus should be on high quality investment and liquidity. Since the investment will be in corporate papers, the focus will remain on its risk management process.
Swaroop Mohanty said, because of its strong credit process, exposure to Mirae asset is not in the stranded asset. Our effort will be to give a stable environment for investment to our investors. This fund is suitable for those investors who are investing over a period of three years. And we believe that investors will like to invest in this fund through SIP.
Benefit of investment
Mahendra Jaju, CIO (Fixed Income), Mirae Asset Investment Managers Pvt Ltd, said the AAA bond yield curve has declined during the year. The credit spread is shrinking and the current yield is creating attractive investment opportunities in the AAA bond segment. Short-term average yield is higher than long-term average yield. This is an indication that the spread is so attractive that this investment can be taken advantage of. With the growth in the economy, the rating of high quality corporate companies is likely to increase.
Spread will increase in the coming months as corporate companies will collect funds from the market. This will prove to be the perfect time to enter the corporate fund in view of the three-year target. The minimum investment in this scheme will be 5000 rupees, then will increase in multiple of one rupee. There is no exit load.
