Mirae Asset Long Duration Fund – Direct(G) : NFO Details

Mirae Asset Long Duration Fund – Direct (G), an open-ended debt scheme that invests in securities with a Macaulay duration of more than seven years and a relatively high interest rate risk and a relatively low credit risk, was introduced by Mirae Asset Investment Managers (India).

Subscriptions for the new fund offer, or NFO, will be accepted starting on November 21 and ending on December 2. On December 9, the program will reopen for ongoing sales and purchases.

Details of the NFO: Mirae Asset Long Duration Fund – Direct (G)

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Investment Objective and Strategy

Objective:

The investment objective of the Mirae Asset Long Duration Fund – Direct (G)  is to seek to generate returns through an actively managed diversified portfolio of debt and money market instruments such that the Macaulay duration of the portfolio is greater than 7 years. However, there is no assurance that the investment objective of the Scheme will be realized and the Scheme does not assure or guarantee any returns.

Investment Strategy:

The Mirae Asset Long Duration Fund – Direct (G) shall be constructed and actively managed according to the investment objective. The Scheme seeks to generate returns through investments in a range of debt and money market instruments such that the Macaulay duration of the portfolio is greater than 7 years. The fund will be managed according to the investment objective, thereby seeking to generate reasonable returns commensurate with low risk. The Scheme may invest in securities issued by corporate (both private sector and public sectors) including banks and financial institutions and Money Market Instruments across maturities / yield curve and ratings.

The The Mirae Asset Long Duration Fund – Direct (G) may also invest in government securities across maturities / yield curve. The fund may also look for opportunities from credit spreads among the range of available debt & money market instruments. The investment strategy of this scheme aims to optimize risk adjusted returns. The scheme will seek to maintain an optimal balance of safety, liquidity and returns while maintaining a long duration profile. The interest rate view and the duration strategy will be guided by various factors affecting the domestic and global macro environment:

• The credit quality of the portfolio will be maintained and monitored using in-house research capabilities as well as inputs from external sources such as independent credit rating agencies.
• The investment team will primarily use a top down approach for taking interest rate view, sector
• allocation along with a bottom up approach for security / instrument selection.
• The bottom up approach will assess the quality of security / instrument (including the financial health of the issuer) as well as the liquidity of the security.
• Investments in debt instruments carry various risks such as interest rate risk, reinvestment risk, credit risk and liquidity risk etc. Whilst such risks cannot be eliminated, they may be minimized through diversification techniques.

Risk associated with Scheme

• Price-Risk or Interest-Rate Risk
• Credit Risk:
• Default Risk
• Downgrade Risk
• Spread Risk
• Liquidity or Marketability Risk Reinvestment Risk 
• Regulatory Risk 
• Pre-payment Risk
• Concentration Risk

How the Risk associated with the Scheme will be Managed?

1. Monitoring risk adjusted returns performance of the fund with respect to its peers and its benchmark.

2. Tracking analysis of the fund on various risk parameters undertaken by independent fund research / rating agencies or analysts and take corrective measures if needed.

3. Interest rate risk is a function of the maturity profile or the tenure of the security in the portfolio. This is proactively monitored by managing average maturity in line with our view on the market. 

4. Credit analysis plays an important role at the time of purchase of bond and then at the time of regular performance analysis. Our internal research anchors the credit analysis. Sources for credit analysis include Capital Line, CRISIL, ICRA updates etc. Debt ratios, financials, cash flows are analysed at regular intervals to take a call on the credit risk.

5. We have different maturity buckets for corporate bonds. By being in different maturity buckets, we avoid concentration of the portfolio in a maturity bucket. We define individual limits for G Sec, money market instruments, MIBOR linked debentures and corporate bonds exposure, for diversification reasons.