Axis Mutual Fund launches ‘Axis Long Duration Fund’

It is an open-ended debt scheme investing in instruments such that the Macaulay Duration of the portfolio is greater than 7 years; a relatively high interest rate risk and a relatively low credit risk.

The new fund will track the NIFTY Long Duration Debt Index A – III.

The NFO for Axis Long Duration Fund opens on Dec 7 and closes on Dec 21.

Additionally, the fund will be managed by Devang Shah, Kaustubh Sule, and Hardik Shah and the minimum investment amount would be Rs. 5,000 and in multiples of Re. 1/- thereafter.

The primary investment objective of the Axis Long Duration Fund is to generate optimal returns consistent with moderate levels of risk.

This income may be complemented by capital appreciation of the portfolio. As the current fund positioning aims to invest and hold onto long dated Government securities, the Axis Long Duration Fund can be used to build and structure long term income solution at the time of retirement. Additionally, long bond yields have remained largely stable & above inflation levels over the last 20 years (source: Bloomberg, CSO, Axis MF Research. Data as of November 30th 2022), historically offering market linked returns above inflation.

Current Positioning of the Axis Long Duration Fund*:

·         Invest in Long Dated Securities: The fund offers the investors an opportunity to invest at the peak of the interest rate cycle and thereby lock in long term rates

·         High Quality Portfolio: The fund endeavours to invest in long dated Government Securities (with a 30 + years horizon) and thereby provides investment in SOV rated instruments to investors

·         Potentially Reduced Volatility: Investments in debt markets generally have reduced volatility over longer tenures in comparison to equity markets

·         Liquidity: Investors can gain from indexation benefits and limited incidence of taxation at the time of withdrawal, as there is no application of entry or exit load, supporting emergency withdrawals

Commenting on the launch of the fund, Chandresh Nigam, MD & CEO, Axis AMC said, “In the current macro environment, fixed income strategies have the potential to be an attractive option for investors, especially those who are in the middle of their career lifecycle and wish to plan for post-retirement. With the launch of the Axis Long Duration Fund, we wish to get investors to rethink retirement investing. Debt mutual funds have the potential to offer significant tax efficiencies and market linked returns as compared to traditional retirement products. In effect, the gap in earning potential over a meaningfully long period can have a material impact on the end corpus. Using systematic investing solutions like SIP & SWP, investors can create a completely flexible investment plan using long dated government bonds.”

What is a Systematic Withdrawal Plan (SWP)?

SWP as the name suggests is a Systematic Withdrawal Plan Facility given to the Unit holders to withdraw a specified sum of money periodically (monthly/quarterly/half yearly/yearly) from his investment in the scheme. In effect, the investor can create a regular cash flow from their invested corpus while the balance stays invested in the fund, thereby continuing to generate market linked returns.