Nippon India ETF Nifty CPSE Bond Plus SDL NFO

Nippon India ETF Nifty CPSE Bond Plus SDL- 2024 Maturity NFO

Nippon India ETF has announced the launch of Nippon India ETF Nifty CPSE Bond Plus SDL- 2024 Maturity. The NFO(New Fund Offer) for this fund opens on 03 November 2020 & closes on 09 November 2020.

What is an ETF?

An Exchange Traded Fund (ETF) is a basket of securities that tracks a particular index. It is listed & traded on the stock exchange. It can invest in securities like equity, commodities, money market instruments & other debt securities. 

About Index

Type of Securities

  • Index aims to track the performance of the portfolio consisting
  • AAA-rated bonds issued by government-owned units or companies
  • SDLs (State Development Loans)
  • The underlying securities have maturities between 01 October 2023 to 30 September 2024.

Category Weightage

An equal allocation of 50% weightage in each into AAA-rated bonds of government-owned entities and 50% in SDLs(State Development Loans).

Maturity

The index has a defined maturity date of 30 September 2020.

Strategy

Index will follow a Buy & Hold Strategy. Hence, the selected portfolio will be held till maturity.

Return Calculations

Total Returns will be used for return calculations which will include price returns & coupon payouts.

Nippon India ETF Nifty CPSE Bond Plus SDL 2024 Maturity - Scheme details

  • Investment Objective

To provide returns to investors that closely correspond to the total returns generated by securities constituting the Nifty CPSE Bond Plus SDL Sep 2024 50:50 Index before expenses, subject to any tracking errors. 

  • Asset Allocation

The indicative asset allocation is as follows:

SecuritiesMinimum Indicative asset allocation(%)Maximum Indicative asset allocation(%)Risk Profile
Bonds issued by Central Public Sector Entities, Units & Financial Institutions and other government entities constituting the bond part of Nifty CPSE Bond Plus SDL Sep 2024 50:50 Index95%100%Low to Moderate
State Development Loans (SDLs) constituting the SDL part of Nifty CPSE Bond Plus SDL Sep 2024 50:50 IndexLow to Moderate
Money Market Instruments (T-bills, G-secs & Tri-party Repos)0%5%Low to Moderate
  • Type of Scheme

It is an open-ended targeted maturity CPSE Bond Plus SDL Fund trading on exchange which primarily invests in the constituent securities Nifty CPSE Bond Plus SDL Sep 2024 50:50 Index.

Why invest in Nippon India ETF Nifty CPSE Bond Plus SDL- 2024 Maturity?

  • Relatively Safe: Investments will be made in AAA-rated papers of government-owned entities & State development loans which are quasi-government securities. Hence, the ETF is highly safe.
  • Tax-Efficient Gains: Long-Term Capital Gains on this fund will be taxed at the rate of 20% after indexation benefits.
  • Transparent: Due to the ETF structure, daily disclosure of the portfolio deposit is made via the creation unit.
  • No lock-in period: Units can be bought or sold on exchange & through the mutual fund at the prevailing market rates.
  • Low Costs: The fund will have a low Total Expense Ratio(TER).
  • Lower Risks: Security selection risks are lower due to following the Buy & Hold strategy and the index.

Investment Philosophy

  • The scheme would primarily invest in AAA-rated bonds of government entities & State development loans (SDL) constituting the Nifty CPSE Bond Plus SDL- 2024 50:50 Index.
  • The securities comprising the portfolio are expected to have similar key characteristics as of the benchmark in terms of maturity & type of securities. 
  • The scheme will follow a buy & hold strategy where underlying investments i.e bonds & SDLs will be held till their maturities.
  • A roll-down strategy will be followed in the portfolio, hence incremental investments will be made in bonds & SDLs comprising the index.
  • In case the underlying securities i.e bonds & SDLs mature during the tenure, the proceeds shall be deployed in T-bills & Tri-party Repos till the maturity.
  • The scheme will have the same maturity as of the underlying benchmark index.

Fund Details

Fund Details
NFO Period03 to 09 November 2020
BenchmarkNifty CPSE Bond Plus SDL September 2024 50:50 Index
PriceApproximately 1/10th of the benchmark index
Fund ManagerPrashant Pimple
Loads

Entry Load: Not Applicable

Exit Load: Not Applicable

Minimum Application AmountRs.5,000 & in multiples of Rs.1 thereafter.
Minimum Application (During ongoing offer)

On Exchange: Minimum 1 unit & in multiples of 1 thereafter.

Through Mutual Fund: Create or redeem in exchange of deposit & cash component in creation size of 2,30,000 units.

ListingNFO units will be listed within 5 business days from the allotment date.

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