Nippon India Mutual Fund has decided to club its Nippon India ETF Nifty CPSE Bond Plus SDL Sep 2024 50:50 and the Nippon India Nifty AAA CPSE Bond Plus SDL – Apr 2027 Maturity 60:40 Index Fund, which will be effective from October 1, 2024. As per the fund house, the merger will help investors remain invested in the current interest rate environment.
Nippon India ETF Nifty CPSE Bond Plus SDL Sep 2024 50:50 focused on providing investment returns closely corresponding to the total returns of the securities as represented by the Nifty CPSE Bond Plus SDL Sep 2024 50:50 Index before expenses. On the other hand, Nippon India Nifty AAA CPSE Bond Plus SDL – Apr 2027 Maturity 60:40 Index Fund is an open-ended Target Maturity Index Fund investing in constituents of Nifty AAA CPSE Bond Plus SDL Apr 2027 60:40 Index.
The most recent Net Asset Value (NAV) of the Nippon India Nifty AAA CPSE Bond Plus SDL – Apr 2027 Maturity 60:40 Index Fund – Regular Plan, reported as of September 16, 2024, stands at Rs 11.13 for the Income Distribution cum Capital Withdrawal (IDCW) option within its Regular plan.
The fund’s performance history displays trailing returns of 7.71% over the past year and 5.5% since its inception. In comparison, the category returns for corresponding periods are noted at 8.33% (1-year), 5.54% (3-year), and 0.0% (5-year).
As of August 31, 2024, the Assets under Management (AUM) of the Nippon India Nifty AAA CPSE Bond Plus SDL – Apr 2027 Maturity 60:40 Index Fund – Regular Plan amount to Rs 3556.08 crore.
Investors should note:
> If you hold units in the merging scheme, you have two options: you can either consent to the merger or exit your investment.
> The merging scheme primarily focused on public sector bonds and SDLs (State Development Loans), providing a balanced 50:50 exposure.
> The merged scheme adjusts this balance to a 60:40 allocation, placing a heavier emphasis on AAA-rated Central Public Sector Enterprises (CPSE) bonds that are set to mature in April 2027.
> By choosing to remain invested, you will be transitioning to a slightly longer-duration product that prioritizes safety and higher-rated bonds. It’s crucial to keep in mind that the lock-in period extends until April 2027.
What are the next steps?
Stay invested: To stay invested in the surviving scheme, consent is required between September 15 and September 30, 2024. Complete the form on Nippon India’s website.
Send consent: Failure to provide consent or choosing not to merge will lead to automatic redemption of units at the prevailing Net Asset Value (NAV) on the merger date.
Pull back: For conservative investors comfortable with longer maturity and preferring a portfolio with AAA-rated bonds and SDLs, remaining in the surviving scheme could be advantageous.
If financial goals are aligned with the September 2024 maturity, or if extending exposure to a product with a three-year horizon is distressing, exiting may be a wiser choice.
Redeeming your investment at this moment can offer you liquidity and the flexibility to reinvest in other more fitting opportunities. It is crucial to consider your financial goals, liquidity requirements, and comfort level with the extension of maturity when deciding whether to stay invested or exit the merged scheme.
Prior to taking any action, evaluate your risk tolerance and investment timeframe.