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Mumbai: Motilal Oswal Asset Management Company (MOAMC) launched its first target maturity fund, the Motilal Oswal Nifty G-sec May 2029 Index fund. This is an open-ended target maturity scheme replicating/tracking the Nifty G-sec May 2029 Index. The fund re-opens for investors on 10th March 2023.

Since the launch of first target maturity fund in 2019, it has found many takers with AUM close to Rs 1.5 lakh crore as on January’2023 at Industry level. For the uninitiated, Target maturity funds have a set maturity date similar like fixed deposit. These funds usually follow a buy and hold strategy and cease to exist at a set maturity date. Such funds offer investors easy entry/exit, stability, higher visibility of returns along with lower tax implication as compared to conventional investment vehicles like fixed deposit

According to the fund house, the scheme Motilal Oswal Nifty G-sec May 2029 Index fund will aim to invest in government securities similar to that of the underlying index. The index will hold in equal proportion 3 government securities maturing in the year 2029.

Navin Agarwal, MD & CEO, Motilal Oswal Asset Management Company Ltd said, “Target maturity fund (TMF) segment has seen phenomenal growth in past couple of years. From being non-existent couple of years back to having more than 70 funds managing ~Rs 1.5Lac Cr, this segment has come a long way. Several factors have contributed to the success of these funds, particularly the return visibility. We are excited to enter into this space with the launch of this fund”

Pratik Oswal, Head of Passive Funds, Motilal Oswal Asset Management Company Ltd said that, “Following the rapid hike in policy rates over last year, the inflation has broadly moved in RBI’s comfort zone thus reducing pressure for further hike in interest rates. This presents an attractive opportunity for investors to invest at these levels, as the yields seem to have peaked out. Investors wanting to lock-in at these levels can turn to target maturity funds, as these funds provide high visibility of returns if held till maturity”

He further added “We find the G-secs particularly in the 4–6 yearsegment to be attractive, considering the tighter spread of SDL & PSUs over G-sec and the shape of the yield curve”

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