IDFC Launches Gilt 2027 and Gilt 2028 Index Funds NFO Review
IDFC Mutual Fund is launching two Gilt funds i.e. IDFC Gilt 2027 Index Fund and IDFC Gilt 2028 Index Funds. These funds are now open for subscription. IDFC Gilt 2027 / 2028 Index Funds would invest in the CRISIL Gilt Index Funds of 2027 and 2028 respectively. Since both have common features except that such fund would invest based on the maturity period of securities of 2027 or 2028, we would cover IDFC Gilt 2028 Index Fund details in this article. Should you invest in IDFC Gilt 2028 Index Fund NFO? What are the risk factors in this mutual fund?
Also Read: Best Gilt Mutual Funds to invest in India
NFO Issue details of IDFC Gilt 2028 Index Fund
This is an open-ended index fund replicating / tracking CRISIL Gilt 2028 Index constituents. Here are the NFO issue details.
| Scheme Opens | 12-Mar-21 |
| Scheme Closes | 19-Mar-21 |
| Scheme reopens for continuous purchase/sale | Within 5 days from date of allotment |
| Minimum Lumpsum | ₹ 500 for 12 months |
| Minimum SIP | ₹ 500 for 6 months |
| NAV of the fund | ₹ 10 during NFO period |
| Entry Load | Nil |
| Exit Load | Nil |
| Risk | Moderate |
| Max expense Ratio (TER) | 2.00% |
| Benchmark | CRISIL Short Term Gilt Index |
Download IDFC Gilt 2028 Index Fund NFO SID
What is the investment objective of the IDFC Gilt 2028 Index Fund?
The investment objective of the scheme is to provide investment returns closely corresponding to the total returns of the securities as represented by the CRISIL Gilt 2028 Index respectively before expenses, subject to tracking errors.
There is no assurance or guarantee that the investment objective of the scheme will be realized.
What is the allocation pattern in this index fund?
Here is how the index fund would invest:
| Type of instruments | Min % | Max % | Risk Profile |
|---|---|---|---|
| Floating Rate Debt Securities (including fixed rate Securities converted to floating rate exposures using swaps/ derivatives) |
65% | 100% | Low to medium |
| Fixed Rate Debt Securities (including money market | 0% | 35% | Low to medium |
What do CRISIL Gilt 2028 Index constituents contain?
Here are the constituents of CRISIL Gilt 2028 Index.
Why to invest in IDFC Gilt 2028 Index Fund?
Here are a few reasons to invest in such index funds.
1) This fund invests in underlying constituents of Crisil Gilt 2028 Index Fund, which are basically government securities. Hence, these would not have default risks.
2) This index contains G-Secs that are maturing in 2027 and 2028. Such gilt funds can provide 6% to 8% annualized returns, though not guaranteed if invested for the entire duration.
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 NAV of the scheme would likely get affected due to changes in interest rates.
2) This scheme invests in G-sec and money market instruments. The value of such investments would keep fluctuating depending on the investment pattern.
3) These funds would have interest rate risk. If there is an increase in interest rates, the underlying value of such funds would go down and vice versa.
4) This index is aimed to provide good returns if invested for 7-8 years. If any investor willing to exit before this period, they might see a decline in their investments due to volatility in the interest rates.
5) Investors should read the SID / KIM / prospectus before investing in such mutual funds.
How is the Performance of Gilt funds?
Let us see the performance of existing gilt mutual funds in the last 1 year to 5 years.
| Fund Name | 1 Year | 3 Year | 5 Year |
|---|---|---|---|
| IDFC Government Securities Fund | 11% | 10% | 10% |
| SBI Magnum Gilt Fund | 10% | 10% | 10% |
| Aditya Birla Sun Life Government Securities Fund | 10% | 10% | 10% |
| Nippon India Gilt Securities Fund | 10% | 10% | 9% |
| Nippon India Gilt Securities PF | 10% | 10% | 9% |
| UTI Gilt Fund | 9% | 9% | 9% |
| L&T Gilt Fund | 8% | 8% | 9% |
| ICICI Prudential Gilt Fund | 10% | 10% | 9% |
| Kotak Gilt Investment Provident Fund and Trust Plan | 10% | 9% | 9% |
| Kotak Gilt Investment | 10% | 9% | 9% |
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Should you invest in the IDFC Gilt 2028 Index Fund?
IDFC Gilt 2028 Index Fund would invest in G-securities that matures in 7-8 years time frame. Such funds can provide 6% to 8% annualized returns though not guaranteed. If an investor wants to exit before this period, they might see their fund value lower than the investment value due to fluctuation in the bond values of underlying securities. Long term investor who is willing to invest for 8 years can invest in such gilt funds. Short term to medium term investors should avoid such funds.
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