SBI Mutual Fund launches first-ever fixed income exchange traded fund SBI-ETF 10 Year Gilt

MUMBAI: SBI Mutual Fund has launched its first-ever fixed income exchange traded fund christened as " SBI-ETF 10 Year Gilt", an open-ended exchange traded scheme.

The scheme would invest up to a minimum of 95 per cent in securities covered by the Nifty 10 year benchmark GSec Index, which have a medium to high risk profile, the fund house said in a report. For the residual 5%, money market instruments like collateralised borrowing and lending obligation or CBLO, will be considered.

The fund will open subscription on Thursday and the new fund offer will close on June 22.

“The 10 year gilt segment is one of the most liquid fixed income segments in the Indian debt market. The ETFs too, owing to low costs, occupy unique position in the investment landscape and are listed on the stock exchanges,” said Navneet Munot, CIO, SBI Mutual Fund.

The fund may also invest in derivatives at the time of portfolio rebalancing, albeit for a short period of time.

“The exposure of the schemes in Derivative instruments shall however, be restricted to 5 per cent of the net assets of the scheme,” the fund house said.

The investment objective of the SBI-ETF 10 Year Gilt is to provide returns that closely correspond to the total returns of the securities as represented by the underlying index.

The changes in interest rates affect the prices of bonds as well as equities. If interest rates rise the prices of bonds fall and vice versa.

The fund manager for SBI-ETF 10 Year Gilt is Mahak Khabia, who is an MBA - Finance, FRM, CFA, joined SBI Funds Management Private Limited as a dealer – fixed income in 2014. He has over six years of experience in the capital market.