Canara Robeco Banking and PSU Debt Fund - NFO Overview

 

Canara Robeco AMC has come out with NFO of "Canara Robeco Banking and PSU Debt Fund", which is an open-ended debt scheme predominantly investing in debt instruments of banks, public sector undertakings, public financial institutions and municipal bonds. 

NFO Period: 29th July - 12th August 2022.

Why invest in a Banking and PSU themed debt fund now?

- Volatile Geo-political situation

- High inflation, leading to sharp Interest rate hikes

- Rising funding costs, coupled with demand drop(due to inflation), likely to hit margins

- Credit profile of lower rated companies may deteriorate in coming years

- Prudent to invest in a portfolio of AAA/A1+ rated securities primarily issued by Banks and PSUs which are of high credit quality and carry a relatively lower credit risk

Note: This type of fund carries a relatively high interest rate risk and moderate credit risk.

Why Canara Robeco Banking and PSU Debt Fund?

- The Fund seeks to generate optimal returns by investing in debt and money market instruments issued primarily by banks, public financial institutions (PFIs), public sector undertakings (PSUs) and municipal bonds.    

- The Fund intends to maintain high credit quality and liquidity in the portfolio, which will primarily consist of AAA rated bonds issued by Banks and PSUs

- The Fund will be an actively managed fund, that aims to manage duration and capture opportunities in the interest rate cycle and mispricing on the yield curve.

How will the Fund Invest?

Types of Instruments	Indicative Asset Allocation (% of total assets)		Risk Profile
	Minimum	Maximum	High/Medium/Low
Debt and Money Market Instruments issued by Banks, Public Financial Institutions (PFIs), Public Sector Undertakings (PSUs) and Municipal Bonds	80	100	Low to Medium
Debt (including securities issued by Central and State Governments) and Money Market Instruments issued by entities other than Banks, PFIs, PSUs and Municipal Bonds	0	20	Low to Medium
Units issued by REITs and InvITs	0	10	Medium to High

Who should Invest in this fund?

-        -  Investors who wish to take exposure towards bonds issued by Banks, Public Sector Undertakings and other government backed securities

-        - Investors with a medium-term investment horizon of 3-4 years

-         - Investors having relatively low to medium risk appetite looking to invest in high credit quality bonds with good liquidity

-        - Investors seeking to gain from accrual and duration calls by investing in short to medium term maturity bonds

 

Risks associated with the scheme:

- Interest Rate Risk

- Credit Risk

- Reinvestment Risk

- Liquidity Risk

- Settlement Risk

- Pre-payment Risk

[Refer to the SID of the scheme for detailed Risks]

Fund Manager: Avnish Jain (Head – Fixed Income) 

Load Structure:  Entry Load: NA; 

                             Exit Load: Nil

Benchmark: CRISIL Banking and PSU Debt Index

Disclaimer: Above article is based on data available here. Please refer to the documentation available at the site for more information regarding the scheme. Investors should consult their financial advisers, about whether the product is suitable for them.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.