A rising interest rate environment, with an anticipated slowdown in rate hikes going forward and recovering/expanding economic growth, has boosted the short-term debt yield curve. SDLs and AAA-rated PSU bonds offer higher yields than G-secs while maintaining a low credit risk profile owing to the high quality of the instruments. The period of up to 5-year maturity offers attractive yields. Target Maturity Funds can be ideal to capitalise on this investment opportunity.
Traditional investing options provide stable returns but do not respond in real-time to changing interest rate scenarios. Target Maturity Funds (TMFs) may be a suitable addition to an investor’s portfolio in this situation. Target Maturity Funds 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 IBX 60:40 SDL + AAA PSU Apr 2026 Index Fund. It is an open-ended Target Maturity Index Fund investing in constituents of the Nifty SDL Plus AAA PSU Bond Jul 2028 60:40 Index. A relatively high interest rate risk and relatively low credit risk.
Table 1: Details of Aditya Birla Sun Life CRISIL IBX 60:40 SDL + AAA PSU Apr 2026 Index Fund
|An open-ended Target Maturity Index Fund investing in constituents of
Nifty SDL Plus AAA PSU Bond Jul 2028 60:40 Index. A relatively high
interest rate risk and relatively low credit risk.
|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 2026 before expenses, subject to tracking errors. The scheme does not guarantee/indicate any returns. There can be no assurance or guarantee that the investment objective of the scheme will be achieved.
|Rs 500 and in multiples of Re 1/- thereafter. Additional Purchase Rs 500/- and in multiples of Re. 1 thereafter.
|Rs 10/- per unit
|CRISIL IBX 60:40 SDL + AAA PSU Index – April 2026
|November 24, 2022
|December 01, 2022
(Source: Scheme Information Document)
What will be the investment strategy for Aditya Birla Sun Life CRISIL IBX 60:40 SDL + AAA PSU Apr 2026 Index Fund?
Aditya Birla Sun Life CRISIL IBX 60:40 SDL + AAA PSU Apr 2026 Index Fund will replicate income over the target maturity period of its underlying index, i.e., CRISIL IBX 60:40 SDL + AAA PSU Index – April 2026, subject to tracking errors. Accordingly, the scheme will invest in securities in line with the benchmark index of the scheme.
The scheme will follow the Buy and Hold investment strategy in which debt instruments by PSU & state government securities will be held till maturity unless sold for meeting redemptions/rebalancing. In case of a change in constituents of the index due to periodic review, the portfolio will be rebalanced within 7 calendar days.
How will the scheme allocate its assets?
During normal circumstances, the scheme’s exposure to money market instruments will be in line with the asset allocation table. However, in the case of maturity of instruments in the scheme portfolio, the reinvestment will be in line with the index methodology.
Table 2: Asset Allocation for Aditya Birla Sun Life CRISIL IBX 60:40 SDL + AAA PSU Apr 2026 Index Fund
|Indicative Allocations (% of Net Assets)
|Instruments forming part of the CRISIL IBX 60:40 SDL + AAA PSU Index – April 2026
|Cash and Debt/Money Market Instruments
(Source: Scheme Information Document)
About the benchmark
CRISIL IBX 60:40 SDL + AAA PSU Index – April 2026 seeks to track the performance of AAA PSU and SDL issuers near the maturity date of the index. The index consists of:
- Corporate issuers with a rating of AAA, issued by PSUs, with a minimum outstanding of Rs. 700 crores in the eligible period, having the security with the highest liquidity.
- State issuers with a minimum outstanding of Rs. 1,500 crores in the eligible period having the security with the highest liquidity.
- The Liquidity score will be calculated based on the volume traded (70%), number of trades (15%) and days traded (15%) in the previous quarter.
Here is the list of constituent issuers under the CRISIL IBX 60:40 SDL + AAA PSU Index – April 2026 as on November 14, 2022:
(Source: Scheme Information Document)
# Note that the index will rebalance semi-annually.
Who will manage Aditya Birla Sun Life CRISIL IBX 60:40 SDL + AAA PSU Apr 2026 Index Fund?
Mr Bhupesh Bameta and Mr Sanjay Godambe will be the designated fund manager for this scheme.
Mr Bhupesh Bameta is a CFA Charterholder (CFA Institute, USA) and has completed his B. Tech (IIT Kanpur). He has an overall experience of more than 10 years in the financial services industry. Prior to joining ABSL AMC, he was the Head of Research in Forex and Rates Desk at Edelweiss Securities Limited, covering global and Indian forex markets and economies. He was with Quant Capital for 6 years as an Economist and was covering the Indian and global economy and markets.
At ABSL Mutual Fund, Mr Bameta currently manages Aditya Birla Sun Life Dynamic Bond Fund, Aditya Birla Sun Life Government Securities Fund, Aditya Birla Sun Life Income Fund, Aditya Birla Sun Life Long Duration Fund, Aditya Birla Sun Life Nifty SDL Apr 2027 Index Fund and Aditya Birla Sun Life Nifty SDL Sep 2025 Index Fund.
Mr Sanjay Godambe has completed his Diploma in Finance Management from L N Welingkar Institute of Management and B. Com from the University of Mumbai. He has an experience of over 14 years in the area of finance, Mutual Fund dealing and its related activities (including fixed-income dealing). He possesses proficient knowledge in Capital Markets, i.e. in Government Securities, Corporate Bonds, Certificate of Deposits and Commercial Papers. He also has prior experience of managing operations and implementing strategies towards enhancing market penetration, business volumes and growth.
At ABSL Mutual Fund, Mr Godambe currently manages Aditya Birla Sun Life CRISIL IBX AAA – Jun 2023 Index Fund, Aditya Birla Sun Life Nifty SDL Sep 2025 Index Fund, Aditya Birla Sun Life CRISIL IBX Gilt – April 2026 Index Fund, Aditya Birla Sun Life CRISIL IBX 50:50 Gilt Plus SDL Apr 2028 Index Fund and Aditya Birla Sun Life CRISIL IBX Gilt April 2029 Index Fund.
Should you invest in Aditya Birla Sun Life CRISIL IBX 60:40 SDL + AAA PSU Apr 2026 Index Fund?
Aditya Birla Sun Life CRISIL IBX 60:40 SDL + AAA PSU Apr 2026 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 2026, subject to tracking error. The scheme offers safety with relatively low credit risk through 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 superior yields as compared to 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 invests in government-backed securities with low credit risk, it is still prone to high debt market and interest rate risks. In addition, the recent increase in interest rates by the RBI maintains the rising interest rate environment, which is unfavourable for debt funds. If there are adverse developments, such as a worsening geo-political scenario, rising inflation, and a massive increase in government borrowings, bond yields can go up further, and investors should be prepared for some volatility. These factors, among others, may have an adverse impact on the scheme’s performance.
The fortune of this scheme will depend on the performance of the underlying index. Thus, the scheme is suitable for investors with a 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