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Kotak  Mutual Fund is launching a new income fund, Kotak FMP Series 293 – 1826 days, that invests in money market and debt securities intending to reduce interest rate risk.

The New Fund Offer (NFO) period for the Baroda Business Cycle Fund is from 26th August 2021 to 01st September 2021.

Objective

The fund’s primary objective is to generate returns by investing in debt instruments and money market securities maturing on or before the scheme matures. Through its asset allocation, it aims to reduce interest rate risk. The scheme doesn’t assure that the primary objective of the fund will be realized.

Kotak FMP Series 293 – 1826 days New Fund Offer Details

Baroda Business Cycle FundDetails
NFO Opening Date26th August 2021
NFO Closing Date01st September 2021
Type of FundClosed-ended Debit Scheme, Income
Fund ManagerMr Deepak Agarwal
Minimum Investment AmountINR 5,000
Exit LoadNil
SuitabilityLow to Medium
BenchmarkNIFTY Medium to Long DurationDebt Index
Plans and OptionsRegular Plan & Direct Plan

Fund manager

Mr Deepak Agarwal

Mr Agarwal is the fund manager of Kotak FMP Series 293-1826 Days. He has been associated with Kotak AMC since 2002. Before working as a fund manager from November 2006 in Kotak AMC, he was in research and dealing. He holds a PG in Commerce from Mumbai University. He is also a CFA, CA and a Company Secretary.

Asset allocation

Kotak FMP Series 293-1826 days fund majorly invests in debt instruments and money market securities. The fund’s portfolio is constructed to maintain a high-quality portfolio and manage credit risk. It considers rating agencies’ ratings, credit premium over the price of sovereign security, rating migration, and general economic conditions. Following is the indicative asset allocation of the fund.

Types of InstrumentsIndicative Allocation MinimumIndicative Allocation MaximumRisk Profile
Debt Instruments (including Government Securities)80%100%Low to Medium
Money Market Instruments0%20%Low to Medium

The portfolio of the fund heavily relies on the fund manager’s opinion. Suppose the fund manager believes that the instruments are of acceptable credit risk and with a minimum chance of default. In that case, he will invest in them. Moreover, the fund manager will only take the ratings given by different agencies as a guide and not as restraints for investing.

Who can invest?

Kotak FMP Series 293-1826 invests in money market and debt securities. It is a low-risk investment and aims to reduce interest rate risk. Hence investors seeking for stable and predictable returns can invest in this scheme.

The scheme is closed-ended and matures only after 1826 days or five years from the date of allotment. So, investors who can stay invested during this lock-in period can invest in the fund. However, investors can sell their units of the fund on the stock exchange during trading days as the fund will be listed on BSE.

The units of the fund can be held in Demat format in addition to the account statement. However, investors who intend to hold the units in demat format must have a Demat account.

Concluding Remarks

Kotak FMP Series 293-1826 Fund is a closed-ended income fund that invests in debt and money market instruments intending to reduce interest rate risk. The fund house will strive to achieve the investment objective with a judicious portfolio mix of money market, debt and government securities.

The fund managers will also assess every opportunity with regard to interest rate risk, credit risk, and liquidity risk. Since the fund invests in debt instruments, investors with a low understanding of risk can invest in the fund. The fund has a fixed tenure of 5 years, but the units can be sold on the stock market. The fund doesn’t guarantee any returns. It is better to consult an advisor to see if the fund fits the investor’s objectives and goals.

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