Mahindra Manulife Short Term Fund NFO – Review
Mahindra Manulife mutual fund has launched Short Term Fund that would open for subscription on 9th February, 2021. Short Term Fund invest in debt securities which matures for short term of 1 to 3 years. These funds are considered to be better than bank fixed deposits. Post Franklin debt mutual funds fiasco, investors are concerned about investing in debt mutual funds. In this situation, should you invest in such Short Term Debt Funds? In this article we would provide Mahindra Manulife Short Term Fund NFO issue details and various risk factors associated with such funds.
Mahindra Manulife Short Term Fund NFO Issue Details
This is an open ended short term debt fund investing in instruments such that the Macaulay duration of the portfolio is between 1 year to 3 years. Here are the NFO issue details.
|Mahindra Manulife Short Term Fund NFO – Issue Details|
|Scheme reopens for continous purchase/sale||25-Feb-21|
|Minimum Lumpsum||Rs 1,000|
|Minimum SIP||Rs 1,000 for 6 months|
|NAV of the fund||Rs 10 during NFO period|
|Max expense Ratio (TER)||2.00%|
|Benchmark||CRISIL Short Term Bond Fund Index|
What is the investment objective of this MF scheme?
The investment objective of the Scheme is to generate income and capital appreciation through an actively managed diversified portfolio of Debt & Money Market instruments such that the Macaulay duration of the portfolio is between 1 year to 3 years.
There is no assurance or guarantee that the investment objective of the scheme will be realized.
What is the allocation pattern in this mutual fund?
This fund investment pattern is as follows:
|Type of instruments||Min %||Max %||Risk Profile|
|Debt and Money Market Instruments||0%||100%||Low to medium|
|Units issued by REITs & InvITs||0%||10%||Medium to High|
Why to invest in the Mahindra Manulife Short Term Fund?
Here are a few reasons to invest in such debt funds.
1) This Short Term Fund would invest in instruments which would mature in 1 year to 3 years. If you are looking for investing for short term of 1 to 3 years, you can invest in such funds.
2) Short Term Funds can provide 5% to 9% annualized returns though not guaranteed. If you are looking for returns higher than bank FDs, one can invest in such funds.
Some key risk factors you should consider before you invest in such funds
One should consider some of these risk factors / negative factors before investing.
1) This fund invests in fixed income securities, bonds, debentures and money market instruments which have price-risk or interest-rate risk. Generally, when interest rates rise, prices of existing fixed income securities fall and when interest rates drop, such prices increase. The extent of fall or rise in the prices is a function of the existing coupon, days to maturity and the increase or decrease in the level of interest rates.
2) Since it invests in debt instruments, these would carry credit risk, default risk and liquidity risk.
3) This scheme would invest in foreign securities which has geopolitical risks and currency fluctuation risks.
4) The Scheme may invest in derivatives up to 20% of the net assets of the scheme for the purpose of hedging and portfolio balancing purposes and up to 10% in REITs and InvITs which are high risk.
5) You can refer complete risk factors of investing in this particular scheme in SID / KIM / NFO prospectus.
Performance of existing Short Term Funds in India
|Fund Name||1 Year||2 Year||3 Year|
|HDFC Short Term Debt Fund||9.1%||9.7%||8.9%|
|Axis Short Term Fund||8.7%||9.4%||8.5%|
|ICICI Prudential Short Term Fund||9.2%||9.7%||8.5%|
|Aditya Birla Sun Life Short Term Fund||9.8%||9.3%||8.4%|
|IDFC Bond Fund – Short Term||7.9%||9.0%||8.3%|
|Kotak Bond Short Term Plan||8.2%||9.1%||8.3%|
|L&T Short Term Bond Fund||8.0%||8.8%||8.1%|
|SBI Short Term Debt Fund||8.0%||9.0%||8.1%|
|Nippon India Short Term Fund||7.8%||8.8%||7.8%|
|DSP Short Term Fund||7.4%||8.6%||7.7%|
Also Read: 10 Mutual Funds to get steady regular income
Should you invest in Mahindra Manulife Short Term Fund NFO?
Mahindra Manulife Short Term Fund invests in debt & money market instruments that mature in 1 to 3 years time frame. Short Term Funds can provide higher returns compared to bank fixed deposits for such tenure. One can expect 5% to 9% annualized returns, though not guaranteed. Moderate risk investors can invest in this fund for 1 to 3 years time frame.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully before investing.
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