Axis AAA Bond Plus SDL ETF - 2026 Maturity Fund of Fund: A Worthwhile Proposition?
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Target Maturity Debt Funds have become an evolving debt fund category that are a suitable for risk-averse investors. A target maturity debt fund has a specified maturity date that aligns with the maturity date of the bonds it has in its portfolio.
Investors are attracted towards these passively managed debt funds investing in AAA rated PSU bonds and SDLs, as they provide access to the fixed income market. Investing in target maturity debt funds provides investors with predictability of returns and stability in the portfolio.
Given the growing popularity of target maturity debt funds among investors, many fund houses have recently launched target maturity debt funds. To create optimal returns, these funds replicate the performance of the underlying index or the underlying scheme following a certain benchmark index.
Axis Mutual Fund one of the fastest growing fund houses has launched Axis AAA Bond Plus SDL ETF - 2026 Maturity Fund of Fund, it is an open-ended Target Maturity Fund of Fund Scheme investing in units of Axis AAA Bond Plus SDL ETF - 2026 Maturity.
Commenting on the launch of this fund, Mr Chandresh Nigam, MD & CEO at Axis AMC said, "The debt space has seen a slew of target maturity products across various maturities and asset types. The idea of having an open-ended structure with a defined maturity is an evolution brought on by passive products. With this FoF offering we hope to expand the availability of such solutions to investors who do not hold Demat accounts and prefer to deal with the AMC directly."
Table 1: Details of Axis AAA Bond Plus SDL ETF - 2026 Maturity Fund of Fund
| Type |
An Open ended Target Maturity Fund of Fund Scheme investing in units of Axis AAA Bond Plus SDL ETF - 2026 Maturity. |
Category |
Fund of Funds |
| Investment Objective |
To invest in units of Axis AAA Bond Plus SDL ETF - 2026 Maturity ETF, an open-ended Target Maturity Exchange Traded Fund with objective to replicate Nifty AAA Bond Plus SDL Apr 2026 50:50 Index by investing in bonds of issuers rated AAA and state development loans (SDL), subject to tracking errors. However, there can be no assurance that the investment objective of the Scheme will be achieved. |
| SIP/SWP/STP |
Available |
| Min. Investment |
Rs 5000/- and in multiples of Re 1/- thereafter. Additional Purchase Rs 1000/- and in multiples of Re 1/- thereafter. |
Face Value |
Rs 10/- per unit |
| Plans |
|
Options |
- Growth
- Income Distribution cum Capital Withdrawal (IDCW)
|
| Entry Load |
Not Applicable |
Exit Load |
- If redeemed / switched-out within 12 months -1%
- If redeemed/switched out after 12 months from the date of allotment: Nil
|
| Fund Manager |
Mr. Aditya Pagaria |
Benchmark Index |
Nifty AAA Bond Plus SDL Apr 2026 50:50 Index |
| Issue Opens: |
September 30, 2021 |
Issue Closes: |
October 13, 2021 |
(Source: Scheme Information Document)
The investment strategy for Axis AAA Bond Plus SDL ETF - 2026 Maturity Fund of Fund will be as follows:
Axis AAA Bond Plus SDL ETF - 2026 Maturity Fund of Fund will predominantly invest in units of Axis AAA Bond Plus SDL ETF - 2026 Maturity ETF.
The scheme will follow a passive investment strategy and aims to replicate the performance of the Nifty AAA Bond Plus SDL Apr 2026 50:50 Index and generate returns by investing in the underlying scheme by minimizing tracking errors.
The underlying scheme is an exchange-traded fund that invests in debt securities backed by the government under the Nifty AAA Bond Plus SDL Apr 2026 50:50 Index. The endeavour is to provide returns closely corresponding to the underlying scheme.
The fund manager will not make any judgments about the investment merit of the underlying securities or ETF nor will it attempt to apply any economic, financial or market analysis. The scheme shall invest all of its funds' assets in units of Axis AAA Bond Plus SDL ETF - 2026 Maturity ETF, except to meet its liquidity requirements.
About the benchmark
Nifty AAA Bond Plus SDL Apr 2026 50:50 Index seeks to measure the performance of portfolio of AAA rated bonds issued by government owned entities, Housing Finance Companies (HFC), Corporates and State Development Loans (SDLs) maturing between May 01, 2025 to April 30, 2026.
The index will be managed by NSE Indices limited and it will be rebalanced every quarter. The benchmark will have an equal allocation to the AAA rated corporate borrowers & state development loans.
Under normal circumstances, the asset allocation will be as under:
Table 2: Asset Allocation for Axis AAA Bond Plus SDL ETF - 2026 Maturity Fund of Fund
| Instruments |
Indicative Allocation (% of assets) |
Risk Profile |
| Minimum |
Maximum |
High/Medium/Low |
| Units of Axis AAA Bond Plus SDL ETF - 2026 Maturity ETF |
95 |
100 |
Low to Medium |
| Debt and Money Market Instruments |
0 |
5 |
Low |
(Source: Scheme Information Document)
Who will manage Axis AAA Bond Plus SDL ETF - 2026 Maturity Fund of Fund?
Mr. Aditya Pagaria will be the dedicated fund manager for this scheme.
Mr Aditya Pagaria is Fund Manager - Fixed Income at Axis Asset Management Company Ltd. His qualification includes Bachelor in Management Studies and Post Graduate Diploma in Business Management and he has over 13 years of experience in financial services industry. Prior to this, he was associated with ICICI Prudential Asset Management Company Ltd. as Manager Support - Fixed Income and later as Fund Manager - Fixed Income.
The other schemes Mr Pagaria manages are; Axis Treasury Advantage Fund, Axis Liquid Fund, Axis Equity Advantage Fund - Series 1 and Series 2, Axis Banking & PSU Debt Fund , Axis Ultra Short Term Fund, Axis Overnight Fund, Axis Money Market Fund and Axis Floater Fund.
Fund Outlook - Axis AAA Bond Plus SDL ETF - 2026 Maturity Fund of Fund
Axis AAA Bond Plus SDL ETF - 2026 Maturity Fund of Fund aims to invest in units of Axis AAA Bond Plus SDL ETF - 2026 Maturity ETF, a target maturity ETF with objective to replicate Nifty AAA Bond Plus SDL Apr 2026 50:50 Index by investing in bonds of issuers rated AAA and state development loans (SDL), subject to tracking errors.
The scheme offers investors a passive long-term debt investment solution with a 5-year investment horizon. It provides a great mix of stability and liquidity to investors when compared to direct investment in bonds.
The target maturity investment approach enables investors the benefit to invest in individual bonds passively through Debt mutual fund structure. Being a fund of fund, it reduces the fund manager's role resulting in low expense ratio as compared to actively managed Debt mutual funds.
The performance of this scheme will depend on the performance of the underlying ETF, as it will mirror the underlying ETF by reducing the tracking errors. Notably, it's a passively managed fund that will aim to generate returns corresponding to the underlying scheme and not outperform the underlying ETF or benchmark.
However, this scheme may involve some credit risk and interest rate risk depending on the instruments in the portfolio, dynamic market conditions and interest rate fluctuations.
You may consider Axis AAA Bond Plus SDL ETF - 2026 Maturity Fund of Fund, if you have a moderate risk appetite and a long investment horizon suitable with the scheme.
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Warm Regards,
Mitali Dhoke
Jr. Research Analyst
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