The conservative investor’s primary requirement would be for fixed income with safety and liquidity. In a favourable economic environment defined by steady liquidity, consistent moderate inflation, and the RBI’s interest rate stance, debt yields remain attractive. This environment is expected to maintain yields for short to mid-term. A target maturity investing strategy is ideal to capitalise on this.

In this current volatile market scenario, SDLs and AAA PSU bonds tend to offer better yields than G-secs. High demand for these securities supports their market prices as well. State development loans (SDLs) are debt securities issued by state governments. These are listed and traded on electronic platforms. These securities are issued by state governments to raise funds for their budgetary expenses.

PSU bonds are corporate bonds, issued by Public Sector Undertakings. These are enterprises in which the government (Central, state, or a combination of both) have a minimum of 51% ownership. The issuers that have been accorded the highest credit rating by CRISIL are accorded AAA status.

SDLs similar to G-Secs have a sovereign rating. As a result, investors may rest assured that their principal and interest will be protected. PSU bonds with a AAA rating are also of the highest quality, posing a low credit risk. These schemes try to imitate the performance of an underlying debt-based index that focuses on SDLs and AAA PSU Bonds, making passive debt index funds an effective way to invest in these securities.

Aditya Birla Sun Life Mutual Fund has launched Aditya Birla Sun Life Crisil SDL Plus AAA PSU Apr 2025 60:40 Index Fund. It is an open-ended Target Maturity Index Fund tracking the CRISIL IBX 60:40 SDL + AAA PSU Index – April 2025. A moderate interest rate risk and relatively low credit risk.

Table 1: Details for Aditya Birla Sun Life Crisil SDL Plus AAA PSU Apr 2025 60:40 Index Fund

Type An open-ended Target Maturity Index Fund tracking the CRISIL IBX 60:40 SDL + AAA PSU Index – April 2025. A moderate interest rate risk and relatively low credit risk. Category Index Fund
Investment Objective The investment objective of the Scheme is to generate returns corresponding to the total returns of the securities as represented by the CRISIL IBX 60:40 SDL + AAA PSU Index – April 2025 before expenses, subject to tracking errors. The Scheme does not guarantee/indicate any returns. There can be no assurance that the objective of the Scheme will be achieved.
Min. Investment Rs 500 and in multiples of Re 1/- thereafter. Additional Purchase Rs 100/- and in multiples of Re. 1 thereafter. Face Value Rs 10/- per unit
SIP/SWP/STP Available
Plans
  • Direct
  • Regular
Options
  • Growth
  • Income Distribution cum capital withdrawal (IDCW)
Entry Load Not Applicable Exit Load
  • For redemption / switch-out of units on or before 30 days from the date of allotment: 0.5% of applicable NAV.
  • For redemption / switch-out of units after 30 days from the date of allotment – Nil
Fund Manager Mr Mohit Sharma Benchmark Index CRISIL IBX 60:40 SDL + AAA PSU Index – April 2025
Issue Opens March 25, 2022 Issue Closes March 29, 2022

(Source: Scheme Information Documents

The investment strategy for Aditya Birla Sun Life Crisil SDL Plus AAA PSU Apr 2025 60:40 Index Fund will be as follows:

Aditya Birla Sun Life Crisil SDL Plus AAA PSU Apr 2025 60:40 Index Fund seeks to track the CRISIL IBX 60:40 SDL + AAA PSU Index – April 2025 subject to tracking errors. Accordingly, the Scheme will endeavour to invest in debt instruments in line with the benchmark of the scheme. The maturity of the Scheme will be April 30, 2025 (“Maturity Date”), and will distribute all of its maturity proceeds (Net Assets) to the Unitholders within 10 (Ten) Business days from the date of maturity of the Scheme, in line with current regulatory timelines.

The Scheme will follow the Buy & Hold investment strategy in which existing bonds will be held untill maturity unless sold for meeting redemptions, payment of IDCW, rebalancing requirements, or optimizing the portfolio construction process.

The portfolio of eligible securities invested by the Scheme shall have, in aggregate, fundamental characteristics such as modified duration, weighted average maturity, aggregate credit ratings, aggregate Yield To Maturity (YTM) etc. along with other liquidity parameters in line with CRISIL IBX 60:40 SDL + AAA PSU Index – April 2025. The Scheme may or may not hold all of the eligible securities which are part of CRISIL IBX 60:40 SDL + AAA PSU Index – April 2025, in line with the SEBI circular no. SEBI/HO/IMD/ DF3/CIR/P/2019/147 dated November 29, 2019.

Further, the norms as indicated in para (1) of SEBI circular no. SEBI/HO/IMD/DF3/CIR/P/2019/147 dated November 29, 2019, reproduced below, shall be adopted –

(a) The constituents of the index shall be aggregated at the issuer level.

(b) The index shall have a minimum of 8 issuers.

(c) No single issuer shall have more than 15% weight in the index.

(d) The rating of the constituents of the index shall be investment grade.

(e) The constituents of the index shall have a defined credit rating and defined maturity as specified in the index methodology.

The Scheme’s exposure to money market instruments will be in line with the Asset Allocation table.

Under normal circumstances, the Asset Allocation will be as under:

Table 2: Asset Allocation for Aditya Birla Sun Life Crisil SDL Plus AAA PSU Apr 2025 60:40 Index Fund

Instruments Indicative Allocation (% of net assets) Risk Profile
Minimum Maximum High/Medium/Low
Debt instruments forming part of the CRISIL IBX 60:40 SDL + AAA PSU Index – April 2025 95 100 Moderate
Cash and Debt/Money Market Instruments 0 5 Low

(Source: Scheme Information Documents

About the Benchmark

CRISIL IBX 60:40 SDL + AAA PSU Index – April 2025 seeks to track the performance of AAA PSU and SDL issuers maturing dated 30th April 2025.

Two components with equal-weighted constituents:

  • SDL component (60%): 10 State issuers will be selected on the basis of liquidity*. Minimum ISIN level o/s shall be ₹ 1,500 crores.
  • AAA PSU component (40%): 10 Corporate issuers with a rating of AAA issued by PSUs will be selected on the basis of liquidity*. Minimum ISIN level o/s shall be ₹ 500 crores.

For each issuer selected, security having maturity nearest to the target date shall be selected. Weights to the issuers will be divided equally, and the securities will be held till maturity.

Here is the list of constituent issuers under the CRISIL IBX 60:40 SDL + AAA PSU Index – April 2025 index:

list

(Source: ABSL CRISIL IBX 60:40 SDL + AAA PSU Index – April 2025

Who will manage Aditya Birla Sun Life Crisil SDL Plus AAA PSU Apr 2025 60:40 Index Fund?

The designated fund manager for this scheme is Mr Mohit Sharma. He holds a PGDCM from IIM Calcutta; and B Tech from IIT Madras and has around 15 years of experience, of which 10 years are in financial markets. Prior to joining Aditya Birla Sun Life AMC Limited, he ran his own healthcare-tech business. He has also worked as an Interest Rates Trader in Standard Chartered Bank and ICICI Bank Ltd. He started his career in Equity Research in Irevna Ltd.

At ABSL AMC, Mr. Sharma currently manages, Aditya Birla Sun Life Interval Income Fund – Quarterly Plan – Series IAditya Birla Sun Life Money Manager FundAditya Birla Sun Life Short Term FundAditya Birla Sun Life Medium Term PlanAditya Birla Sun Life Dual Advantage Fund – Series IIAditya Birla Sun Life Balanced Advantage FundAditya Birla Sun Life Nifty SDL Plus PSU Bond Sep 2026 60:40 Index FundAditya Birla Sun Life Credit Risk FundAditya Birla Sun Life Dynamic Bond FundAditya Birla Sun Life Fixed Term Plan – Series PU and Series PVAditya Birla Sun Life Fixed Term Plan – Series PY (1409 days)Aditya Birla Sun Life Fixed Term Plan – Series QF (1385 days)Aditya Birla Sun Life Fixed Term Plan – Series RC (1295 days) and Series RD (1293 days)Aditya Birla Sun Life Fixed Term Plan – Series RH (1281 days)Aditya Birla Sun Life Fixed Term Plan – Series RL (1254 days)Aditya Birla Sun Life Fixed Term Plan – Series RN to Series RRAditya Birla Sun Life Fixed Term Plan – Series RU to Series RYAditya Birla Sun Life Fixed Term Plan – Series SA (1180 days)Aditya Birla Sun Life Fixed Term Plan – Series SF (1161 days) and Series SG (1155 days)Aditya Birla Sun Life Fixed Term Plan – Series SI to Series SLAditya Birla Sun Life Fixed Term Plan – Series SN and Series SOAditya Birla Sun Life Low Duration FundAditya Birla Sun Life Fixed Term Plan – Series TI (1837 days) and Series TJ (1838 days) and Aditya Birla Sun Life Nifty SDL Plus PSU Bond Sep 2026 60:40 Index Fund.

Fund Outlook – Aditya Birla Sun Life Crisil SDL Plus AAA PSU Apr 2025 60:40 Index Fund

Aditya Birla Sun Life Crisil SDL Plus AAA PSU Apr 2025 60:40 Index Fund is a passively managed debt index fund that aims to replicate the performance of the CRISIL IBX 60:40 SDL + AAA PSU Index – April 2025, subject to tracking error. The scheme offers safety with relatively low credit risk by investments in SDL and AAA PSU bonds.

The scheme invests in a 60:40 proportion of quality SDL and AAA PSU bonds and has no duration risk when held until maturity. Further, its roll-down strategy is conducive to the current interest rate environment.

The underlying index aims to invest in SDL & AAA PSU Bonds that continue to provide yield kicker v/s G-Secs and are also liquid. The scheme provides investors with a mix of quality papers with better risk-adjusted performance and liquidity.

Although the scheme offers low credit risk by investing in high-quality government-backed securities, it is still prone to market risks. According to the Union Budget 2022-23, due to higher-than-expected government borrowings, there could be a negative impact on the bond yields. The Indian bond markets have already displayed discomfort in this respect, plus owing to the fact that RBI is on the path to monetary policy normalisation.

In addition, the possible increase in interest rates in coming quarters and the recent geopolitical tension between Russia-Ukraine is also weighing down on the Indian debt market sentiments. As a result, the bond market is expected to remain volatile in the near term. The interest rate risk amidst the dynamic market conditions is likely to have a bearing on the scheme’s performance.

Thus, Aditya Birla Sun Life Crisil SDL Plus AAA PSU Apr 2025 60:40 Index Fund is suitable for investors with a low to moderate risk profile looking forward to building their Debt portfolio and ensuring an investment horizon to match the fund’s portfolio duration.

This article first appeared on PersonalFN here


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