Groww Unveils Gilt Fund for Long-Term Investors Seeking Stability : NFO Details

Groww Gilt Fund is an open-ended debt scheme categorized under Gilt Funds, aiming to offer credit risk-free returns by primarily investing in sovereign securities issued by the Central or State Governments, or securities guaranteed by the Government of India. The scheme may also invest in reverse repos, triparty repos on government securities, treasury bills, or other similar instruments as permitted by RBI regulations. While there is no guaranteed achievement of the investment objective, the scheme ensures liquidity by allowing purchase and redemption at NAV-based prices on all business days. Redemption proceeds are dispatched within 3 working days, failing which a penal interest of 15% per annum is applicable. The fund is benchmarked against the CRISIL Dynamic Gilt Index, which aligns well with its asset allocation strategy. The scheme will not be listed on stock exchanges initially, but the trustee retains the right to list it in the future if regulations allow.

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Key Features of Groww Gilt Fund – Direct (G)

What are the Groww Gilt Fund's Investment Objective?

The objective of the Groww Gilt Fund – Direct (G) is to generate credit risk-free returns by predominantly investing in sovereign securities issued by the Central Government  and/or State Government(s) and/or any security guaranteed by the Government of India, and/or reverse repos in such securities as per applicable RBI Regulations and Guidelines. The Scheme may also be investing in Reverse repo, Triparty repo on Government securities or treasury bills and/or other similar instruments as may be notified from time to time. However, there is no assurance that the investment objective of the Scheme will be achieved.

What are the Investment Strategy of Groww Gilt Fund?

• The Groww Gilt Fund – Direct (G) actively identifies securities offering optimal yield considering the risk-reward ratio.
• A minimum of 80% of total assets will be invested in government securities across maturities.
• Remaining assets may be deployed in other debt and money market instruments including cash equivalents.
• In-depth credit evaluation is conducted by the AMC's risk management team for all investments.
• Macroeconomic factors such as interest rates, liquidity, and political environment guide portfolio positioning.
• The scheme may invest in other mutual fund schemes per SEBI regulations, without charging investment management fees.
• Derivatives like OIS, interest rate swaps, and futures may be used for hedging and portfolio balancing.
• Derivative strategies involve risk and depend on the fund manager’s ability to execute them effectively.
• The scheme may invest in securitized debt and undertake repo transactions in corporate debt securities.
• In-house quantitative and fundamental models guide dynamic portfolio decisions to achieve objectives.

What are the Risk associated with Groww Gilt Fund?

• Interest Rate Risk: Rise in interest rates may lead to a fall in bond prices, impacting returns.
• Re-investment Risk: Future interest income may be at lower rates than original bond coupons.
• Basis Risk: Benchmark rates used for floating securities may become inactive or misaligned.
• Spread Risk: Adverse movement in spread over benchmark rates can reduce portfolio value.
• Liquidity Risk: Difficulty in selling securities in volatile markets may lead to valuation losses.
• Credit Risk: Possibility of issuer defaulting on interest or principal payments, especially in corporate bonds.
• Unlisted Security Risk: Selling unlisted securities before target dates may cause valuation losses.
• Settlement Risk: Delay or failure in security settlement can hamper fund strategy execution.
• Securitized Debt Risk: ABS/MBS carry risks from underlying loans like auto, personal, or housing loans.
• Lower Rating Risk: Lower-rated corporate bonds may carry higher default or downgrade risks.

Groww Gilt Fund is suitable for what type of Investor?

Groww Gilt Fund – Direct (G) is suitable for investors who are seeking:

• Credit risk free returns over medium to long term.  

• Investments mainly in government securities of various maturities.