NFO Review : Aditya Birla Sun Life CRISIL 10 Year Gilt ETF : Aditya Birla Sun Life Mutual Fund Asset Management Company (AMC) has launched a new fund offer (NFO). The name of this new mutual fund scheme is Aditya Birla Sun Life CRISIL 10 Year Gilt ETF. Public subscription in this NFO has opened from 7 August and will continue till 12 August. Allotment of units will be done after the subscription ends on 12 August. Within 5 business days of completion of allotment, buying and selling of the units of the scheme will start through NSE and BSE. This is an open-ended debt ETF, which has no exit load. The minimum amount of subscription for investing in the scheme is Rs 1000 and after that investment can be made in multiples of Rs 100.
What is the purpose of NFO
The main objective of this NFO of Aditya Birla Sun Life Mutual Fund is to invest in government securities and treasury bills. A very small part of the portfolio of Aditya Birla Sun Life Crisil 10 Year Gilt ETF will also be kept in cash and cash-like assets. As its name suggests, it will be a debt exchange traded fund (Debt ETF), which will track the Crisil 10 Year Gilt Index. The managers of the fund are Bhupesh Bameta, Sanjay Godambe and Vighnesh Gupta.
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Past returns of the benchmark index
This scheme of Aditya Birla Sun Life will track the CRISIL 10 Year Gilt Index, hence to estimate its returns, you can take a look at the past returns of this index:
- 10-year average annual return of benchmark index: 7.18%
- 5-year average annual return of the benchmark index: 5.00%
- 3-year average annual return of benchmark index: 5.10%
- 1-year average annual return of benchmark index: 8.99%
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Past returns of similar funds
There is only one scheme tracking the CRISIL 10 Year Gilt Index, whose performance record for the last 10 years is available on AMFI’s portal. This scheme is Bandhan Government Securities Fund Constant Maturity Plan, which has given an annual return of 8.61 percent in the regular plan and 8.75 percent in the direct plan during 10 years. On the other hand, the scheme SBI Magnum Constant Maturity Fund, which tracks Nifty’s G-Sec linked index NIFTY 10 yr Benchmark G-Sec Index, has given a return of 8.47 percent in the regular plan and 8.82 percent in the direct plan in the last 10 years.
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Should you invest in this fund?
In the NFO document, Aditya Birla Sun Life Crisil 10 Year Gilt ETF has been introduced as a scheme with comparatively high interest rate risk and low credit risk. Overall, this fund has been placed in the moderate risk category. According to the scheme information document, at least 95 percent of this fund will be invested in government securities (G-Sec), which can be up to a maximum of 100 percent. While the scheme’s investment in treasury bills, cash and cash-like instruments will be from 0 to 5 percent. This scheme is better for those investors who want to invest in government securities from a long term perspective. However, it should also be kept in mind that the past returns of the scheme’s benchmark index have not been very attractive.