SCBF as per the mandate is expected to follow this allocation as per the regulator’s definition, besides invest  upto 20% in other debt instruments, Central and State Government(s) dated securities and money market instruments, and  upto 10% in units of REITs and InVITs

On the risk-return spectrum of debt funds, a corporate bond fund is relatively safe than a credit safe fund. If you wish to seek exposure to highest rate corporate bond, this category of debt mutual fund would be appropriate. However, you also ought to keep a close watch on the duration of a respective scheme. For a medium-term investment time horizon of 2 to 3 years, a corporate bond fund can be considered.

Table 1: NFO Details

Type	An open-ended debt scheme	Category	Corporate bond fund
Investment Objective	To provide the investors with an opportunity to predominantly invest in corporate bonds rated AA+ and above to generate additional spread on part of their debt investments from high-quality corporate debt securities while maintaining moderate liquidity in the portfolio through investment in money market securities. However, there is no guarantee or assurance that the investment objective of the scheme will be achieved. The scheme doesn't assure or guarantee any returns.
Min Investment	Rs 5,000 and in multiples of Re 1 thereafter	Face Value	Rs 10 per unit
Plans	• Direct • Regular	Options	Growth (default option) Dividend Re-investment (default option) Pay-out Transfer
Entry Load	Not Applicable	Exit Load	For exit on or before 6 months from the date of allotment – 1.00% For exit after 6 months from the date of allotment – Nil
Fund Manager	Mr Rajeev Radhakrishnan - Debt and Money Market Instruments. Mr Mohit Jain - Foreign securities.	Benchmark Index	NIFTY Corporate Bond Index
Issue Opens	January 16, 2019	Issue Closes	January 29, 2019

(Source: Scheme Information Document)

How will the SBI Corporate Bond Fund allocate its assets?

Under normal circumstances, the scheme’s asset allocation pattern will be as under:

Table 2: SCBF’s Asset Allocation

What will be the Investment Strategy of SBI Corporate Bond Fund?

The scheme aims to generate attractive returns through high-quality corporate debt securities which are rated AA+ and above. The performance will depend on the fund manager’s ability to accurately assess the financial position of the security issuers regarding paying off its debt.

A credit analysis will be followed using a bottom-up approach starting with looking at each individual issuer, industry, terms and covenants of an issue, etc. A team of credit analyst will do a detailed analysis and prepare an initiation note to introduce an issuer to the Accepted Credit Universe. For every issuer the focus will be on 4 Cs:

• Credit

• Capacity

• Character

• Collateral

While carrying out due diligences for credit risk, following parameters/attributes are analysed:

• Management Quality

• Financial Analysis

• Business Analysis

• Industry Analysis

• Regulatory Environment

• Feedback from Creditors

• Other Issues; auditor report and qualifications, etc.

Once a credit limit is set, it is regularly monitored based on internal Tier classification.

The investments may be made in primary as well as secondary markets. The portfolio will be sufficiently diversified to minimize credit risk.

The Scheme being open-ended, some portion of the portfolio will be invested in money market instruments to meet the liquidity requirements.

Who will manage the SBI Corporate Bond Fund?

Mr Rajeev Radhakrishnan is the lead fund manager and shall manage investments in Debt and Money Market Instruments, while Mr Mohit Jain will manage investments in foreign securities in the Scheme.

Mr Rajeev Radhakrishnan has to his credit a bachelor’s degree in Production Engineering [B.E. (Production), an MMS degree (in Finance) and is a CFA (CFA Institute, USA).

He has a total experience of around 17 years in funds management and around 10 years in Fixed Income funds management and dealing. Before joining SBI Funds Management P. Ltd he was associated with UTI Asset Management Company Ltd. as the co-fund manager.

At the fund house, Mr Rajeev Radhakrishnan manages SBI Magnum Children's Benefit Fund, SBI Short Term Debt Fund, SBI Magnum Ultra Short-Term Debt Fund, SBI Magnum Low Duration Fund, SBI Dual Advantage Fund – Series I to XXIX (Debt portion), SBI Banking & PSU Fund and SBI Debt Fund Series.

Mr Mohit Jain is the dedicated fund manager for managing overseas investments of the Schemes of the Fund which have a mandate to invest in overseas securities.

The outlook for SBI Corporate Bond Fund

SBI Corporate Bond Fund carries liquidity risks, interest rate risk, credit risks and reinvestment risk among others. To mitigate risk the fund house has necessary framework in place at an enterprise level. Diversification and hedging may help as a risk mitigation strategy.

[Read: Why Comparing Returns to Risk Is More Meaningful!]

Factors such as inflation, the direction of policy rates, currency movement, fiscal deficit, and the consequent impact on yields, plus the ratings assigned to debt papers held in the portfolio, etc. will weigh on the potential performance of the scheme.

How the fund managers construct the portfolio to deal with the risk that could weigh down the performance remains to be seen. The fortune of the fund will be ultimately linked to the quality of corporate bonds, debt papers and money market instruments held in the overall portfolio.

[Read: Skip NFOs, Instead Consider Building A Strategic Mutual Fund Portfolio]

PS: If you’re looking for “high investment gains at relatively moderate risk”, this report is extremely worthy. In this report, PersonalFN offers you this great opportunity:

The 2019 Edition of PersonalFN’s Premium Report, “The Strategic Funds Portfolio For 2025"

In this report, PersonalFN will provide you with a ready-made portfolio of its top equity mutual funds schemes for 2025 that have the ability to generate lucrative returns over the long term.

PersonalFN’s “The Strategic Funds Portfolio for 2025” is geared to potentially multiply your wealth in the years to come. Subscribe now! 

DISCLOSURE AS PER SECURITIES AND EXCHANGE BOARD OF INDIA (RESEARCH ANALYSTS) REGULATIONS, 2014

About the Company including business activity

Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989.

QIS was promoted by Mr Ajit Dayal with an objective of providing value-based information/views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.

'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name www.personalfn.com for providing information on mutual funds and personal financial planning, financial markets in general, etc. and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services.

Quantum Information Services Private Limited (QIS) is registered as Investment Adviser under SEBI (Investment Adviser) Regulations, 2013 and having Registration No.: INA000000680. In terms of the second proviso to Regulation 3 (1) of SEBI (Research Analysts) Regulations, 2014 the Company is not required to obtain Certificate of registration from SEBI.

Disciplinary history

There are no outstanding litigations against the Company, its subsidiaries and its Directors.

Terms and condition on which its offer research report

For the terms and condition for research report click here.

Details of associates

1. Money Simplified Services Private Limited;

2. PersonalFN Insurance Services India Private Limited;

3. Equitymaster Agora Research Private Limited;

4. Common Sense Living Private Limited;

5. Quantum Advisors Private Limited;

6. Quantum Asset Management Company Private Limited;

7. HelpYourNGO.com India Private Limited;

8. HelpYourNGO Foundation;

9. Natural Streets for Performing Arts Foundation;

10. Primary Real Estate Advisors Private Limited;

11. HYNGO India Private Limited;

12. Rahul Goel;

13. I V Subramaniam.

Disclosure with regard to ownership and material conflicts of interest

1. ‘Subject company’ is a company on which a buy/sell/hold view or target price is given/changed in this Research Report;

2. Neither QIS, it's Associates, Research Analyst or his/her relative have any financial interest in the subject Company;

3. Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report;

4. Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However, any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront / annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices.

Disclosure with regard to receipt of Compensation

1. Neither QIS nor it's Associates have received any compensation from the subject Company in the past twelve months;

2. Neither QIS nor it's Associates have managed or co-managed public offering of securities for the subject Company;

3. Neither QIS nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject Company;

4. Neither QIS nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.

5. Neither QIS nor it's Associates have received any compensation or other benefits from the subject Company or third party in connection with the research report

General disclosure

1. The Research Analyst has not served as an officer, director or employee of the subject Company.

2. QIS or the Research Analyst has not been engaged in market making activity for the subject Company.

Definitions of Terms Used

1. Buy recommendation:This means that the subscriber could consider buying the concerned fund keeping in mind the tenure and objective of the recommendation service.

2. Hold recommendation:This means that the subscriber could consider holding on to the fund until further update. However, additional purchase via ongoing SIP can be considered.

3. Sell recommendation: This means that the subscriber could consider selling the fund keeping in mind the objective of the recommendation service.

Click here to read PersonalFN’s Mutual Fund Rating Methodology

Quantum Information Services Private Limited CIN: U65990MH1989PTC054667 Regd. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021 Corp. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021. Email: info@personalfn.com Website: www.personalfn.com Tel.: 022 61361200 Fax.: 022 61361222
SEBI-registered Investment Adviser. Registration No. INA000000680, SEBI (Investment Advisers) Regulation, 2013

Add Comments