Mumbai, Feb 8 (Agency) 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 pc 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 pc 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.