With target maturity funds becoming investment one of the top options in the fixed income space, asset management companies (AMCs) are coming out with differentiated target maturity funds to present a better risk-reward proposition, maximise yields, and also to make their product stand out in a sea of offerings.
Target maturity funds, which first started as fixed-tenure open-ended debt funds investing in papers of AAArated public sector companies, now have at least 10 varieties, if one looks at the asset mix of the portfolios.
There are now schemes that exclusively invest in gilt, state development loans (SDL), or AAA-rated corporate papers. Beyond these, there is another range of schemes that has a different mix of these papers like Nifty Index and CRISIL IBX 70:30 CPSE Plus SDL Index.
According to industry officials, fund houses have been forced to ideate new types of schemes, given the rising competition in this space.
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