NFO Alert: HDFC Mutual Fund launches HDFC Income Plus Arbitrage Omni FOF

The new fund offer or NFO of the scheme is open for subscription and will close on March 11.

HDFC Income Plus Arbitrage Omni FOF will dynamically manage its allocation by adjusting portfolio duration and credit exposure based on factors such as the interest rate outlook, RBI monetary policy, yield curve dynamics, liquidity conditions and arbitrage spreads between the cash and futures markets, according to a press release by the fund house.

The scheme will aim to maintain the exposure to units of debt-oriented mutual fund schemes, debt securities and money market instruments below 65%. At least 35% of the portfolio will be allocated to arbitrage schemes.

“In today’s fixed income environment, investors are increasingly seeking solutions that combine income potential and prudent risk management. With HDFC Income Plus Arbitrage Omni FOF, we endeavour to provide a solution that will allow investors to dynamically allocate across arbitrage schemes and active and passive debt-oriented schemes, with the objective of building yield potential while aiming to manage volatility,” said Navneet Munot, Managing Director and Chief Executive Officer, HDFC Asset Management Company.

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Anchored in our rigorous credit evaluation process and execution discipline, this product seeks to provide a differentiated approach to accrual investing, Munot added.

By virtue of this allocation strategy, the Scheme will be tax-efficient and in addition to this, the FOF structure seeks to provide investors the benefit of active asset allocation without triggering taxation on switching between underlying schemes, said the release. This Scheme will be managed by Bhavyesh Divecha and Praveen Jain. The benchmark for this Scheme is 40% NIFTY 50 Arbitrage Index (TRI) and 60% NIFTY Short Duration Debt Index.

“Currently, while growth remains healthy, we remain cautiously optimistic on the yields in view of benign inflation outlook, ample system durable liquidity in FY27 and expectation of low policy rates to continue in the foreseeable future. Furthermore, in our view, most negative sentiments look to be largely priced into the current yield levels, thereby providing scope for yields to drift lower hereon,” said Praveen Jain.

“Considering RBI is close to the end of rate cut cycle, accrual assets appear to be well- placed, with the spreads of non-AAA corporate bonds sitting at a higher level versus AAA corporate bonds, and higher than its long-term averages. This could create room for spread compression, along with possible easing of yields over the medium term. Hence, investors could explore investing in HDFC Income Plus Arbitrage Omni FOF – an easy and convenient way to allocate across units of arbitrage schemes and active and passive debt-oriented schemes in a tax-efficient manner,” Jain added.

Investors can invest with a minimum amount of Rs 100 during the NFO period and during the continuous offer period after the scheme reopens for subscription and redemption. There is no upper limit on investment, and allotment of units will be done after deduction of applicable stamp duty, if any. An exit load of 1% is applicable if units are redeemed or switched out within 18 months from the date of allotment.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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