ICICI Prudential Mutual Fund has launched ICICI Prudential Nifty SDL Sep 2026 Index Fund, an open-end managed target maturity index fund.
The fund seeks to track the underlying debt index with a fixed maturity date. Therefore, the elements of the index are “up-to-date” properties.
The New Fund Offer (NFO) for ICCICI Prudential Nifty SDL (State Development Loans) Sep 2026 index fund will run from December 15 to 20, 2022.
The scheme will invest in components of the Nifty SDL Sep 2026 index to match the returns of the underlying index.
SDLs are similar to Government Guarantees (G-Secs) issued by the central government to manage public finances and fund fiscal deficits issued by state governments. SDLs, therefore, present one of the lowest credit risks.
Commenting on the fund, ICICI Prudential AMC’s Head of Product Development and Strategy, Chintan Haria, said in a press release on Thursday that fifteen states and Union Territories (UTS) will be selected on the basis of the highest combined score (extreme volume and liquidity score). For SDLs maturing on September 30, 2022 for the six-month period ending on September 30, 2026, it is calculated on September 30, 2022.
Haria added, “In an environment of rising interest rates, investors looking for fixed-term returns in a specific maturity bucket can consider investing in target maturity index funds.”
Key Features of ICCICI Prudential Nifty SDL Index Fund
• Key features of Target Maturity Index Funds include a “hold-to-maturity approach” as it replicates an underlying index comprising various state governments and UTAs or G-Secs depending on the chosen offering.
• If the fund is held for more than three years, he said, investors can get indexation benefits, which will provide after-tax returns to those in higher tax brackets.
• ICICI Prudential Nifty SDL, Sep 2026 Index Fund, seeks to invest in SDL maturity segment above 3.5 years.
• Short Term Capital Gains (STCG) tax is applicable as per revenue slabs while Long Term Capital Gains (LTCG) is taxed at 20% with indexation benefit.
• The fund provides exposure to government-sponsored financial instruments.
• This open plan has no lock-in period and allows one to buy and sell.
• The underlying index matures in September 2026. Hence, the fund is suitable for those seeking a medium-term goal.