Invesco India Medium Duration Fund NFO Review
Invesco India mutual funds has launched medium duration debt fund that would open for subscription on 29th June 2021. Medium duration funds invest in debt securities that matures in 3 to 4 years. These funds are considered to be better than bank FD. Invesco India medium duration fund nfo would invest based on Macaulay duration of 3-4 years. In this article we would provide Invesco India Medium Duration Fund NFO issue details and various risk factors associated with such funds.
Invesco India Medium Duration Fund – NFO issue details
This is an open-ended equity mutual fund scheme. Invesco India Medium Duration Fund NFO would open for subscription on Tuesday, June 29, 2021, and closes on Tuesday, July 13, 2021. It would further open for subscription within 5 working days after NFO closure. Here are the NFO issue details.
|Scheme reopens for continuous purchase/sale||Within 5 days from closure|
|Minimum Lumpsum||Rs 1,000|
|Minimum SIP||Rs 1,000 for 6 months|
|NAV of the fund||Rs 10 during NFO period|
|Benchmark||CRISIL Medium Term Debt Index|
What is the investment objective of this MF scheme?
This is an open-ended medium-term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 3 years and 4 years.
Investment objective of this fund is to generate income by investing in a portfolio of Debt and Money Market Instruments such that the Macaulay duration of the portfolio is between 3 years and 4 years. Investors should always invest based on Macaulay duration to get highest returns.
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 (including government securities) and Money Market Instruments across duration||0%||100%||Low to Medium|
|Units issued by REITs and InvITs||0%||10%||Medium to High|
However, the Fund Manager, in the interest of investors, may reduce the portfolio duration of the Scheme up to 1 year in case he has views on the interest rate movements in the light of anticipated adverse situation.
Why to invest in the Invesco India Medium Duration Fund?
Here are a few reasons to invest in such debt funds.
1) Medium duration funds would invest in debt instruments which would mature in 3 to 4 years time frame. If your investment objective is to invest for 3-4 years, you can invest in such funds.
2) Debt fund investors should invest based on Macaulay duration. Under Macaulay duration, fund would invest based on specific tenure (in this case it is 3-4 years) securities which helps to maximize returns.
3) Medium duration debt funds can provide 6% 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 would invest in securities of corporates which turned high risk in the last 2-3 years.
2) It invests in debt instruments where there is credit risk, liquidity risk, default risk and re-investment risk.
3) Such debt funds would have interest rate risks (interest rate increases, bond yield fall and vice versa).
4) This scheme would invest in REITs and InvITs, which are high risk.
4) You can refer complete risk factors of investing in this scheme in SID / KIM / NFO prospectus.
Performance of existing Medium Duration Debt Funds in India
|Fund Name||2 Yrs||3 Yrs||5 Yrs|
|SBI Magnum Medium Duration Fund||9.8%||9.7%||9.2%|
|Axis Strategic Bond Fund||9.1%||8.1%||8.2%|
|ICICI Prudential Medium Term Bond Fund||9.5%||8.6%||8.1%|
|HDFC Medium Term Debt Fund||8.5%||8.4%||7.9%|
|IDFC Bond Fund – Medium Term Plan||7.8%||8.4%||7.6%|
|L&T Resurgent India Bond Fund||8.3%||7.5%||7.2%|
|Kotak Medium Term Fund||7.8%||7.0%||7.2%|
|Sundaram Medium Term Bond Fund||5.4%||6.1%||6.4%|
|Franklin India Income Opportunities Fund||2.9%||4.6%||6.3%|
|DSP Bond Fund||7.6%||5.3%||6.3%|
|UTI – Medium Term Fund||2.3%||3.4%||5.1%|
|BNP Paribas Medium Term Fund||7.7%||2.9%||4.2%|
|Tata Medium Term Fund||9.1%||2.3%||4.0%|
Should you invest in Invesco India Medium Duration Fund NFO?
Invesco India Medium Duration Fund invests in debt instruments which matures based on Macaulay duration of 3-4 years. Medium duration funds can provide higher returns compared to bank fixed deposits. If you are moderate risk investor, looking for returns that are higher than bank FDs and willing to invest for medium duration of 3-4 years, you can invest in such funds.
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