Axis Mutual Fund’s new fund offer scheme called ‘Axis Floater Fund’ opened for subscription on Monday. The fund is aimed at offering efficient solutions to short-term investors as they navigate what could be a rising interest rate environment, one of the fastest-growing fund houses said in a statement. Touted as an ideal platform to park the investments, the newly launched fund will offer “better risk-reward opportunities over other traditional alternatives in the short term.”
How the Axis Floater Fund Works
The open-ended debt scheme will invest in floating rate instruments including fixed-rate instruments converted to floating rate exposures using swaps or derivatives and will target around 80 per cent of the ‘AAA’/’A1+’ bonds along with 20 per cent allocation to ‘AA’ issuers.
It expects the minimum investment horizon to be 12-18 months and targets a net portfolio average maturity of 6-18 months. The minimum application (NFO) of Rs. 5,000 and in multiples of Re 1/- thereafter, the fund house said. This has made the fund a suitable option for short-term investors who are looking to park short-term surplus funds as well as for clients looking to mitigate the interest rate risks in their debt portfolio, the company added.
The strategy this fund employs to mitigate the interest rate risk is to do so by investing in bonds where the coupon is linked directly to the market movement, the company said. It is structured in such a way that it targets 80 per cent AAA/A1 along with a 20 per cent allocation to AA issuers, it further added. Axis Floater Fund is laid out in this way to capture debt market opportunities. In this way the fund will offer better risk-reward opportunities over other existing alternatives in the short-term investment market, the company mentioned.
Key Points to Remember about Axis Floater Fund
This kind of scheme is particularly ideal for those looking to make short or medium-term investment solutions, the company added.
The floating rate strategies are ideal because they help investors earn market-linked inflation-beating returns while also navigating the growing interest rate risk situation, it further noted.
Commenting on the new Axis Floater Fund, Chandresh Nigam, managing director and chief executive officer, Axis AMC said, “The economic fundamentals are improving gradually and returning to normalcy. These are early signs of a pickup in demand and we believe we are on the cusp of a new growth cycle. The country is also likely at the bottom of the interest rate cycle and we expect rates to see a gradual rate hike cycle in the medium term. With the launch of this fund, we believe that we will provide an efficient solution for short-term investors looking to navigate a possible rising rate environment.”
“At Axis AMC, we have always believed in being ahead of time and introducing a product bouquet which gives our investors promising avenues for wealth creation. Every investor holds different goals, risk appetite and a different time horizon to achieve the set goals. Therefore, we aim at personalising and intelligently crafting multiple investment options to fulfil the needs of our investors,” Axis AMC CEO further said.