Canara Robeco Mutual Fund announced the launch of Canara Robeco Banking and PSU Debt Fund. The open-ended debt program would invest primarily in debt securities of banks, public sector enterprises (PSUs), public financial institutions (PFIs) and municipal bonds.
The New Fund Offering (NFO) will open for initial subscription on July 29, 2022 and will close on August 12, 2022. After that, it will be open for subscription on a rolling basis, starting on or before August 29, 2022. , according to a press release from the fund house.
Canara Robeco said the actively managed program would invest in high-quality assets, primarily AAA-rated bank bonds and PSUs. It would aim to manage duration and capture opportunities in the interest rate cycle and mispricings on the yield curve.
He said the risk associated with issuance by banks and PSUs is relatively lower due to the comprehensive regulatory framework for banks of the Reserve Bank of India (RBI) and government ownership in the case of PSUs and PSUs. PFI.
The fund’s benchmark index is the CRISIL Banking and PSU Debt Index.
Avnish Jain, head of fixed income and fund manager, Canara Robeco, said the fund would maintain high credit quality and liquidity in the portfolio through a three-pronged approach. It would contain risk by adhering to issuer and/or sector limits, closely monitor liquidity, as well as manage portfolio concentration and weighted average maturity, he said.
According to Jain, the allocation would include 80-100% bonds and money market instruments issued by banks, PSUs, PFIs and municipal bonds. Debt allocation would be up to 20%, including G-secs/State Development Loans (SDLs) and money market instruments, issued by entities other than banks, PFIs, PSUs and municipal bonds, and from 0 to 10% in units. issued by REITs and InvITs.
“We will strive to maintain a conservative portfolio by exposing ourselves to high credit quality issuers with a low credit risk profile, and to follow an optimal diversification among the various issuers in the banking sector and the PSU space”, Jain said.
Jain further stated that they planned the NFO in the banking and PSU category based on their experience in managing debt portfolios with high credit quality and low credit risk papers.