On paper, it is more cost-effective than other active short-duration debt funds
27-Jan-2023 •Chirag Madia
Edelweiss Mutual Fund has launched India's first passive short-duration index fund.
The fund, named Edelweiss CRISIL IBX 50:50 Gilt Plus SDL Short Duration Index Fund, opened its first-time subscription on January 27. New investors can invest in the new fund offer (NFO) until February 10.
Edelweiss Mutual fund's MD and CEO Radhika Gupta, who successfully launched the Bharat Bond ETF series of debt index funds, said they were launching this new fund because "many active debt funds (have been) underperforming their benchmark due to high costs".
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On paper, the new passive fund is more cost-effective than its active counterparts.
This fund's direct and regular plan will have an expense ratio of 0.15 and 0.65 per cent, respectively. In comparison, active short-term debt funds have an average expense ratio of 0.33 per cent in direct plans and 0.99 per cent in regular plans.
Edelweiss Mutual Fund added that the new fund will benefit investors who want to park their money for one-three years without taking unnecessary credit risks.
Reading the fine print
As the name suggests, this new fund will follow the CRISIL IBX 50:50 Gilt Plus SDL Short Duration Index.
This new fund will invest 50 per cent in Indian Government Bonds (IGBs) and the remaining half in State Development Loans (SDLs).