DSP CRISIL-IBX Financial Services 3-6 Months Debt Index Fund - Direct (G): NFO Details

The DSP CRISIL-IBX Financial Services 3-6 Months Debt Index Fund - Direct (Growth) is a short-duration passive debt fund that aims to offer stable returns with low interest rate risk by mirroring the performance of the CRISIL-IBX 3-6 Months Financial Services Index. This index comprises high-quality debt instruments—primarily issued by financial sector entities—maturing within three to six months.

Designed for conservative investors seeking to park surplus funds for the short term, the fund emphasizes safety, liquidity, and predictable returns, making it a suitable alternative to traditional savings instruments. As a passively managed index fund, it offers the advantages of low cost, transparency, and rule-based investing within a well-defined maturity bucket. The fund is ideal for those with an investment horizon of up to six months and a low appetite for credit or interest rate risk.

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Details of the NFO: DSP CRISIL-IBX Financial Services 3-6 Months Debt Index Fund - Direct (G)

Investment Objective and Strategy

Objective:

The investment objective of the scheme is to track the CRISIL-IBX Financial Services 3-6 Months Debt Index by investing in Commercial Papers (CPs), Certificates of Deposit (CDs) and Corporate Bond Securities, maturing in 3-6 months and seeks to generate returns that are commensurate (before fees and expenses) with the performance of the underlying Index, subject to tracking error.   

There is no assurance that the investment objective of the Scheme will be achieved.

Investment Strategy:

The Scheme follows a passive investment strategy. The Scheme seeks to track the CRISILIBX Financial Services 3-6 Months Debt Index subject to tracking error. Accordingly, the Scheme will invest in Commercial Papers (CPs), Certificates of Deposit (CDs) and Corporate Bond Securities, maturing in 3-6 months. The portfolio of eligible securities invested by the Scheme is expected to have, in aggregate, fundamental characteristics such as modified duration, weighted average maturity, aggregate credit ratings, aggregate Yield to Maturity (YTM) etc. along with other liquidity parameters in line with CRISIL-IBX Financial Services 3-6 Months Debt Index. The Macaulay Duration of Scheme shall replicate the duration of the index, in line with SEBI Master Circular, subject to maximum permissible deviation of +/- 10%.

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Risk Associated with the DSP CRISIL-IBX Financial Services 3-6 Months Debt Index Fund - Direct (G)

Risks associated with Debt Securities and Money Market Securities:

• Market/Volatility Risk: The Scheme, being an open ended constant maturity index fund tracking CRISIL-IBX Financial Services 3-6 Months Debt Index in a passive manner. The index has little duration risk at the time of maturity. Based on that, we expect to mitigate intermittent price volatility in the underlying assets. Investors who remain invested until the maturity of the Scheme are expected to mitigate market / volatility risk to large extent.   
• Credit risk: The Scheme will invest in securities as permitted under the Asset Allocation Pattern. These instruments bear low credit risk. Thus, this risk is mitigated to some extent.   
• Liquidity risk: The index is designed to include securities that are liquid in the  8 secondary markets, helping to mitigate liquidity risk. However, this risk is not entirely eliminated through index design alone.  
• Performance risk: The Scheme will be passively managed and in accordance with the norms stipulated in SEBI Master Circular on Mutual Funds dated June 27, 2024, in case of unavailability of issuances forming part of the index.  While these measures are expected to mitigate the above risks to a large extent, there can be no assurance that these risks would be completely eliminated.

What are the Risk Mitigation Strategies of DSP CRISIL-IBX Financial Services 3-6 Months Debt Index Fund - Direct (G)?

The DSP CRISIL-IBX Financial Services 3-6 Months Debt Index Fund - Direct (G) employs several risk mitigation strategies to ensure capital preservation and stable returns over the short investment horizon. Here are the key strategies:

• Short Duration Exposure: The fund invests only in instruments maturing within 3 to 6 months, which significantly reduces interest rate risk (duration risk). Short maturity ensures minimal sensitivity to interest rate fluctuations.
• High-Quality Credit Portfolio: It tracks the CRISIL-IBX 3-6 Months Financial Services Index, which comprises highly rated debt instruments (typically AAA or equivalent) issued by reputed financial institutions. This reduces credit risk or the risk of default.
• Passive Management: Since the fund is index-based and passively managed, it eliminates fund manager bias and follows a rule-based investment approach, reducing the risk of active management errors.
• Sector-Specific Focus: The fund invests exclusively in the financial services sector, which is tightly regulated and generally includes systemically important and well-capitalized issuers like banks and large NBFCs, further mitigating default risk.
• High Liquidity Instruments: The fund includes liquid and tradable instruments, ensuring efficient portfolio rebalancing and reducing liquidity risk, especially important for short-term investors.
• Defined Maturity Profile: A well-defined maturity bucket helps in cash flow predictability and reduces reinvestment risk, since the duration of the instruments is closely aligned with the fund’s target maturity profile.