SBI MF Launches Inflation Indexed Bond Fund

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oi-Sunil

By Sunil Fernandes

Published: Friday, October 24, 2014, 14:37 [IST]

SBI Mutual Fund today said it has launched an inflation indexed bond fund (IIBF) offering which is aimed at investors with low to medium risk profile looking at a hedge against price rise. Under the open-ended debt scheme, SBI Mutual Fund will invest in inflation indexed securities and actively manage a portfolio of predominantly inflation linked bonds (IIBs), it said in a statement.

"The real return is low or negative in case of alternate avenues like Fixed Deposit investments, and also for representative debt indices. Inflation Indexed Bonds (IIB)would always provide a fixed real return, irrespective of the level," SBI MF's managing director and chief executive D K Khara said. The IIBF would invest a minimum of 70 percent and up to 100 percent in Inflation Indexed Securities, and up to 30 percent in money market instruments/units of debt and liquid mutual funds, it said.

The exposure to domestic securitized debt would be to the extent of 20 percent of net assets, it added. It can be noted that in order to push people looking for a hedge against inflation, and restrict investments in other non-financial avenues like gold, the Reserve Bank has been pushing the inflation indexed bonds. Inflation has been trending down for the past few months and the RBI has repeatedly stated its resolve in bringing it down further to 6 percent by January 2016. The SBI IIBF new fund offering opened last week and will close for initial subscription on October 31.

PTI