The Union Asset Management Company (AMC) Pvt Ltd, cosponsored by Dai-ichi Life Holdings, Inc and Union Bank of India, announced the launch of the Union Gilt Fund. It is an open-ended debt scheme which invests a minimum of 80% of its total assets in government securities across maturities.
The New Fund Offer (NFO) subscription of Union Gilt Fund will open on 18 July 2022 and close on 1 August 2022. The allotment date is 8 August 2022, and the scheme will reopen for ongoing repurchase and sale on 17 August 2022.
CRISIL Dynamic Gilt Index is the benchmark against this scheme, and Parijat Agrawal and Anindya Sarkar will manage it. The required minimum investment is Rs.1,000, and after that, in multiples of Rs.1.
The scheme is labelled as ‘Moderate Risk’ according to the Risk-o-metre. Under the Risk-o-metre introduced by SEBI, each scheme is labelled as one of the six risk levels – Very High, High, Moderately High, Moderate, Moderately Low and Low. These risk levels depict the associated risks with a mutual fund scheme.
Data from Value Research reflects that the existing gilt funds (regular plan) have fetched a five-year return of 3.6-7.2% and a three-year return of 3-6%. Currently, the Union AMC manages 18 open-ended schemes, of which eight are categorised as equity schemes, four as hybrid and six as debt schemes.
Parijat Agrawal, the Head-Fixed Income of Union AMC, stated that the current yield of elevated levels of debt instruments is a potentially good entry point for investors. Sovereign securities carry the lowest levels of credit risk. Currently, it has a dual advantage in the form of high accrual income and the possibility of capital gains when interest rate cycles reverse in the future. Investors with a three-year horizon can benefit from the long-term capital gains taxation.
Pradeepkumar, the Chief Executive Officer (CEO) of Union AMC Pvt Ltd, stated that the launch of the Union Gilt Fund is in line with their constant endeavour to offer products that help investors in wealth creation. With the scheme’s introduction, Union AMC’s debt product basket presently offers schemes with duration risk and varied credit. This scheme would serve all investors looking for risk-free credit returns over three years.
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