What you need to know about Motilal Oswal, the new passive fund offerings from Edelweiss AMC
As the debate over whether investors should buy and sell stocks directly to beat benchmarks or whether they prefer to stick with indexes continues, two asset managers have launched new passive programs .
The first new fund offering – Motilal Oswal Asset Allocation Passive FoF – invests in all asset classes, geographies and the option of investing in a conservative or aggressive fund of funds is up to the investor, according to Pratik Oswal, responsible for passive funds at Motilal. Oswal Asset Management Co. All investors should primarily build the portfolio with an allocation between asset classes so that the volatility of one is offset by the stability of the other at some point, he said. stated in BloombergQuint’s weekly special. The Mutual Fund Show.
Investing fully in stocks, according to Oswal, is a good strategy, but the only problem is that few people are able to accept the volatility associated with stocks. “And therefore, asset allocation funds are the preferred route.”
He said, however, that these funds are subject to debt tax, which involves a much higher tax rate than equity funds. But the benefit of indexation is available to investors who want to hold such funds for a slightly longer period, Oswal said.
Edelweiss Asset Management Co. launches Nifty PSU Bond Plus SDL index fund, which the fund company claims to be India’s premier debt index fund.
It is a complement to a range of passive debt products with a target maturity offered by the fund house. “Target maturity products are those for which you have a set period, whether it’s three years, five years, etc., and you only have a buy and hold strategy,” Radhika Gupta said, Managing Director and Managing Director of Edelweiss AMC. “It can work very well because an investor knows the portfolio and the indicative return.”
As to why an investor should choose the Nifty PSU Bond Plus SDL index fund over the Bharat Bond ETF, Gupta said the new fund offers a 50% PSU and 50% development loan basket.
The reason for investing in SDLs right now, she says, is “due to the circumstances around us and the borrowing of states, SDLs are actually trading at higher yields than PSUs.” , Gupta said. “So for the investor there is a very good risk-adjusted return ahead, where you get better returns than a pure PSU product, but actually with a very good credit risk profile. the Indian government has borrowings, which we know as G-Sec; SDL borrows from good quality states and is sovereign rated.
According to Gurmeet Chaddah, CEO of Complete Circle Consultants, the offer makes sense for investors who want to keep their maturity date. “Medium- to long-term (6-7) year yields can rise and remain under pressure due to rising inflation. Larger government borrowing can widen the gap between SDLs and G-Secs, leading to volatility and market impact, the financial planner added.