Mahindra Credit Risk Yojana (Debt Fund) - Best NFO in 2018

Mahindra Mutual Fund is launching a new open-ended debt fund scheme ‘Mahindra Credit Risk Yojana’ for those investors who wish to predominantly invest in AA and below rated corporate bonds. This new fund offer will open for the investor from 27th July 2018 & will close on August 10, 2018.

Who is this for?

This new fund offer is an ideal debt fund scheme for investors having a moderate risk profile and looking for diversification of their existing portfolio. This scheme will be an ideal choice for those investors who’re seeking for an optimal balance of yield, liquidity, and safety. Investors seeking an alternative to traditional investment option must invest in this scheme as it will deliver better risk adjusted return to them after the completion of minimal lock-in period.

Investment Objective

The scheme is launched with the objective of capital appreciation and generating regular returns in investor portfolio by predominantly investment in AA and below rated corporate bonds, money market instruments, debt funds and government securities maintaining the optimum balance of liquidity, yield and safety of such financial instrument. The particulars of this scheme have been prepared under the norms prescribed in SEBI (Mutual Fund) Regulation Act 1996. The units which are provided for public subscriptions neither approved nor disapproved by Securities and Exchange Board of India. Also, SEBI has not certified its adequacy or accuracy.

Risk Mitigation Factor

Risk is an integrated aspect of every investment function which needs to be managed properly in order to achieve a financial objective. Like other schemes, this debt scheme will also require discipline approach to risk management & here also the risk controlling process lower risk factors by diversifying the portfolio. Such diversification will play a significant role in attaining the desired level of consistency in returns.

Investment Strategy

This scheme seeks investors to predominantly invest in AA rated or below rated corporate debt securities. Your fund manager will invest in these securities to maximize the scheme accrual of the scheme. As this scheme is meant for investors with a moderate risk profile, therefore, you should be prepared for the tactical allocation in your portfolio by your fund manager to generate desirable returns even under the prevalent marketing conditions.

Plan and Options

This scheme is available under two plans for investor’s viz. Direct Plan and Regular Plan with a common portfolio but separate NAVs. Each plan will have two option viz. Growth option & Dividend Option. The regular plan is applicable for all investors with moderate risk profile.

Asset Allocation

The indicative allocation for AA and below rated corporate funds is 65%-100% for investors having a medium risk profile. While the indicative asset allotment for debt and money market instruments is 0%-35 % for investors with a low-risk portfolio. In this scheme, investor’s principal will be under moderate risk and therefore Mahindra is launching this NFO with minimum purchase/ repurchase amount of Rs 1000 or multiples of Re 1 thereafter & redemption amount of Rs 1,000 or 1 unit or account balance whichever is lower for investor portfolio. Also, the minimum SIP amount assign by the company for investors is Rs 500 monthly and Rs 1500 on a quarterly basis.

Illustrations for Capital Gains Taxation

Assumptions: An investment of Rs 1,00,000 is made on 14 Feb 2015 by an investor falling under the income capital slab of 30%. Growth rate is assumed to be 8% per annum.

*2014-15 CII: 240 and 2017-18 CII: 272 considered for indexation. Source: Income Tax Department

Note: The above calculation is for illustration purposes only to explain the indexation benefits available under the extant income tax laws and does not constitute legal or tax advice. In view of the individual nature of the tax consequences, investors are advised to consult their financial / tax advisors before investing.

Conclusion

Mahindra Credit Risk Yojana is suitable for investors seeking to acquire capital appreciation as well as regular return over the medium term. It can be considered as an alternate to traditional investments like Bank Fds over a medium term. However, it is better for an investor to first consult about this scheme with his financial advisor. You can contact Swaraj Wealth for investment and to get free advice for fund selection.