AXIS CRISIL-IBX AAA Bond NBFC-HFC-Jun 2027 Index Fund - Direct (G): NFO Details

AXIS CRISIL-IBX AAA Bond NBFC-HFC-Jun 2027 Index Fund - Direct (G) is a passive debt mutual fund that aims to replicate the performance of the CRISIL-IBX AAA Bond Plus SDL Index – June 2027. This fund focuses on investing in a mix of AAA-rated bonds issued by NBFCs (Non-Banking Financial Companies), HFCs (Housing Finance Companies), and SDLs (State Development Loans), providing a high degree of credit safety while targeting steady returns. With a maturity date of June 2027, it offers investors a predictable investment horizon, aligning with their medium-term financial goals. Designed for conservative investors, this fund combines the benefits of credit quality, liquidity, and diversification, making it an attractive option for stable income-seeking portfolios.

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Details of the NFO: AXIS CRISIL-IBX AAA Bond NBFC-HFC-Jun 2027 Index Fund - Direct (G)

Investment Objective and Strategy

Objective:

The investment objective of the scheme is to provide investment returns before fees and expenses that closely corresponds to the total returns of the securities as represented by the CRISIL- IBX AAA NBFC-HFC Index - Jun 2027, subject to tracking error. 

There is no assurance that the investment objective of the Scheme will be achieved.

Investment Strategy:

The investment strategy of the AXIS CRISIL-IBX AAA Bond NBFC-HFC-Jun 2027 Index Fund - Direct (G) is to replicate the performance of the CRISIL-IBX AAA Bond Index by investing in a diversified portfolio of high-quality AAA-rated bonds issued by NBFCs and HFCs. The fund employs a buy-and-hold strategy to align with the index constituents, ensures semi-annual rebalancing, and holds securities until maturity (June 2027) for predictable returns. It provides credit safety, stability, and liquidity, making it suitable for medium-term conservative investors.

Why Invest in AXIS CRISIL-IBX AAA Bond NBFC-HFC-Jun 2027 Index Fund - Direct (G)?

Reasons to Invest in AXIS CRISIL-IBX AAA Bond NBFC-HFC-Jun 2027 Index Fund - Direct (G):

High Credit Quality: The fund invests exclusively in AAA-rated bonds issued by NBFCs and HFCs, ensuring strong creditworthiness and minimal default risk.

Predictable Returns: With a target maturity of June 2027, the fund provides a clear investment horizon and predictable returns for medium-term financial goals.

Diversification: Exposure to a well-diversified portfolio of high-quality debt instruments spreads risk and enhances portfolio stability.

Tax Efficiency: If held for more than three years, investors can benefit from indexation under long-term capital gains tax, reducing overall tax liability.

Liquidity: As an open-ended fund, it allows easy entry and exit with no exit load, providing flexibility for investors.

Passive Management: By closely tracking the CRISIL-IBX AAA Bond Index, the fund offers low-cost exposure to a curated portfolio, ensuring efficient performance with minimal tracking error.

Suitable for Conservative Investors: Ideal for those seeking stable income with low risk and alignment to a defined investment period.

Alignment with Goals: Perfect for individuals or institutions looking to align investments with medium-term objectives such as planned expenditures or financial milestones in 2027.

Strength and Risks - AXIS CRISIL-IBX AAA Bond NBFC-HFC-Jun 2027 Index Fund - Direct (G)

Strengths:

The Axis CRISIL-IBX AAA NBFC Index – June 2027 Fund offers several strengths for investors seeking a stable and predictable investment avenue:

High Credit Quality: The fund invests exclusively in AAA-rated debt securities issued by leading Non-Banking Financial Companies (NBFCs), ensuring minimal credit risk. 

Defined Maturity Structure: With a target maturity date of June 30, 2027, the fund provides a clear investment horizon, allowing investors to align their financial planning accordingly. 

Predictable Returns: By adopting a 'buy and hold' strategy and holding securities until maturity, the fund aims to deliver returns that closely mirror the yield of the underlying index, offering predictability for medium-term financial goals. 

Liquidity: As an open-ended scheme with no exit load, investors have the flexibility to enter or exit the fund at their convenience, enhancing liquidity. 

Cost Efficiency: The passive management approach results in a relatively lower expense ratio compared to actively managed funds, potentially enhancing net returns. 

Tax Efficiency: If held for more than three years, investments may qualify for long-term capital gains tax with indexation benefits, reducing tax liability.

These attributes make the Axis CRISIL-IBX AAA NBFC Index – June 2027 Fund a compelling option for conservative investors seeking stable returns with low credit risk over a defined investment period.

Risks:

Investing in the Axis CRISIL-IBX AAA Bond NBFC-HFC-Jun 2027 Index Fund offers several advantages, but it's essential to be aware of the associated risks:

Interest Rate Risk: The fund's value is sensitive to interest rate fluctuations. An increase in interest rates can lead to a decline in the market value of the fund's holdings, potentially affecting returns.

Credit Risk: Although the fund invests in AAA-rated securities, there's still a minimal risk of credit downgrades or defaults by issuers, which could impact the fund's performance.

Liquidity Risk: In certain market conditions, selling securities at desired prices may become challenging, affecting the fund's ability to meet redemption requests promptly.

Tracking Error: As a passive fund aiming to replicate the CRISIL-IBX AAA NBFC Index – Jun 2027, discrepancies between the fund's performance and the index can occur due to factors like fees, expenses, and cash balances.

Reinvestment Risk: The fund reinvests interest income from its holdings. If interest rates decline, the reinvested income may earn lower returns, potentially affecting the fund's overall yield.

Sector Concentration Risk: The fund focuses on AAA-rated NBFC and HFC issuers, leading to sector-specific risks. Adverse developments in these sectors could impact the fund's performance.

Investors should consider these risks in relation to their financial goals and risk tolerance before investing in this fund.