Bandhan CRISIL-IBX 10:90 Gilt + SDL Index – Dec 2029 Fund – Direct (G) : NFO Details

Bandhan Mutual Fund has launched the Bandhan CRISIL-IBX 10:90 Gilt + SDL Index – Dec 2029 Fund – Direct (G) Fund, an open-ended index fund designed to closely track the CRISIL-IBX 10:90 Gilt + SDL Index – Dec 2029 while minimizing tracking errors. The New Fund Offer (NFO) starts on February 25, 2025, and closes on March 5, 2025. Investors can subscribe with a minimum investment of ₹1,000, with no exit load applicable. The fund aims to provide stable returns by investing in a mix of government and state development loans (SDLs).

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Details of the NFO: Bandhan CRISIL-IBX 10:90 Gilt + SDL Index – Dec 2029 Fund – Direct (G)

Investment Objective and Strategy

Objective:

The investment objective of Bandhan CRISIL-IBX 10:90 Gilt + SDL Index – Dec 2029 Fund – Direct (G) is to provide investment returns closely corresponding to the total returns of the securities as represented by the CRISIL-IBX 10:90 Gilt + SDL Index – Dec 2029 before expenses, subject to tracking errors.

However, there is no assurance or guarantee that the investment objectives of the scheme will be realized and the scheme does not assure or guarantee any returns.

Investment Strategy:

Primary Allocation:

95% to 100% of total assets will be invested in State Development Loans (SDLs) and Government Securities (G-Secs) forming part of the CRISIL-IBX 10:90 Gilt + SDL Index – Dec 2029.

0% to 5% will be allocated to cash and money market instruments for liquidity management.

Portfolio Duration Management:

• The fund will replicate the index duration within a ±10% permissible deviation as per SEBI norms.
• For portfolios with residual maturity >5 years, deviation can be ±6 months or ±10% of duration, whichever is higher.
• For portfolios with residual maturity ≤5 years, deviation can be ±3 months or ±10% of duration, whichever is higher.
• No security in the portfolio will have a residual maturity beyond the target maturity date (December 2029).

Tracking Error & Tracking Difference:

• The annual tracking error will not exceed 2% per annum under normal circumstances.
• The annualized tracking difference averaged over one year will not exceed 1.25%.
• If tracking difference exceeds 1.25%, corrective actions will be taken and reported to trustees.

Reinvestment Strategy:

• Upon maturity of securities, reinvestment will align with the index methodology.
• The scheme will replicate the underlying debt index as per SEBI regulations.

Exposure Limits:

The total gross exposure to G-Secs, repo transactions, money market instruments, and other approved assets will not exceed 100% of the net assets.

Cash Management:

Funds not immediately deployed in securities will be parked in short-term deposits of scheduled commercial banks as per SEBI guidelines.

No investment management or advisory fees will be charged for parking funds in bank deposits.

This structured investment approach ensures that the fund closely tracks the performance of the CRISIL-IBX 10:90 Gilt + SDL Index – Dec 2029, while maintaining liquidity and minimizing tracking error.

Risk Associated with Bandhan CRISIL-IBX 10:90 Gilt + SDL Index – Dec 2029 Fund

The value of the Scheme’s investments, may be affected generally by factors affecting securities markets, such as price and volume volatility in the capital markets, interest rates, currency exchange rates, changes in policies of the Government, taxation laws or any other appropriate authority policies and other political and economic developments which may have an adverse bearing on individual securities, a specific sector or all sectors including equity and debt markets. Consequently, the NAV of the Units of the Scheme may fluctuate and can go up or down.

▪ Different segments of the Indian financial markets have different settlement periods and such periods may be extended significantly by unforeseen circumstances. The inability of the Scheme to make intended securities purchases due to settlement problems could cause the Scheme to miss certain investment opportunities. By the same rationale, the inability to sell securities held in the Scheme’s portfolio due to the absence of a well developed and liquid secondary market for debt securities would result, at times, in potential losses to the Scheme, in case of a subsequent decline in the value of securities held in the Scheme’s portfolio.

▪ The NAV of the scheme to the extent invested in Money market securities, are likely to be affected by changes in the prevailing rates of interest which may affect the value of the Scheme’s holdings and thus the value of the Scheme’s Units.

▪ Investment decisions made by the AMC may not always be profitable.

▪ The ability of the Scheme for payment of Income Distribution cum capital withdrawal will be dependent on the Scheme having distributable surplus and subject to approval of the Trustees. Accordingly, investors may not get Income Distribution cum capital withdrawal in case distributable surplus is not available. Due to the reasons mentioned above and other reasons that may arise, it is expected that the scheme may have a tracking error in the range of 2% per annum from the Benchmark. However, it needs to be clearly understood that the actual tracking error can be higher or lower than the range given.