An Open-ended Debt Scheme predominantly investing in floating rate instruments (including fixed rate instruments converted to floating rate exposures using swaps/derivatives)
February 06, 2021: IDFC Mutual Fund announced the launch of IDFC Floating Rate Fund, with the New Fund Offer (NFO) opening on Wednesday, February 10, 2021 and closing on Tuesday, February 16, 2021. The Fund will endeavour to generate relatively stable returns through a portfolio comprising substantially of floating rate debt, fixed rate debt instruments swapped for floating rate returns and money market instruments. The fund aims to invest a minimum of 65% of its corpus in floating rate securities issued by corporates or the government, or convert fixed interest securities to floating via derivatives.
Highlighting the rationale behind IDFC Mutual Fund launching the fund now, Vishal Kapoor, CEO – IDFC Asset Management Company Limited (AMC) said, “In addition to the growth-oriented announcements made in the recent Union Budget, factors such as stress on banking balance sheets seem to be stabilizing. The manufacturing sector may get a boost from corporate tax cuts announced earlier alongside a robust production incentive scheme roll out and improving global trade. Government revenues are also likely to see a cyclical upswing. Additionally, monetary policy is genuinely accommodative. In our view, these cyclical factors could combine to provide potential tailwinds for the fund’s investment strategy.”
The fund currently targets a low to short duration portfolio such that it is suitable for a minimum recommended investment horizon of six months. At the time of investing, the portfolio strategy will aim to maintain a minimum of 70% in AAA / A1+Equivalent / Sovereign / Quasi Sovereign securities, and the fund does not intend to invest in securities rated lower than AA-. With this diluted credit strategy, the fund is designed for investors looking to diversify their current fixed income portfolio, and those seeking a lower investment horizon within their ‘Satellite’ allocation as indicated in IDFC’s 3-lens Debt Allocation Framework
The IDFC 3-lens Debt Allocation Framework helps identify and manage risk in an investor’s debt portfolio. The framework segregates debt funds into three buckets: Liquidity, Core and Satellite. Liquidity allocations are meant for very short-term parking of surpluses or maintaining an emergency corpus. Core allocations should ideally form the bulk of an investor’s debt allocation, with funds that focus on high credit quality and low to moderate maturity profile matched to investment horizon. The Satellite bucket has funds that can take higher risk. Within these buckets are different fund offerings with varying minimum horizons that can aide decision making.
Mr. Anurag Mittal, Senior Fund Manager and Mr. Arvind Subramanian, Fund Manager and Head of Credit Research, each with over a decade of industry experience will be the fund managers. The scheme is benchmarked against the NIFTY Low Duration Debt Index.
Established in 2000, IDFC AMC is one of India’s Top 10 asset managers with an average AUM around Rs. 1,20,000 cr. at the end of December 2020, across 57 Mutual Fund schemes. It has an experienced investment team with deep on-the-ground presence in over 46 cities, and investors across over 250 cities and towns in India. IDFC AMC is focused on helping savers become investors and create wealth. To support this objective, the AMC offers a range of prudently constructed investment products – across equities, fixed income and liquid alternatives - that aim to provide performance consistent with their well-defined objectives.