Aditya Birla Sun Life Mutual Fund has filed papers with SEBI for Aditya Birla Sun Life Overnight Fund. As per the filing, the scheme will primarily invest in securities that mature overnight. Overnight funds as a separate sub-category of debt schemes were introduced by SEBI as part of its mutual fund scheme categorization and rationalization circular in October, 2017. Due to the short maturity of their scheme’s investments, overnight funds provide reasonable returns and high liquidity while simultaneously featuring a low level of risk. The Aditya Birla Sun Life Overnight Fund will be open-ended with zero exit load allowing investors to purchase/redeem units on all business days at no extra cost.
Being an overnight fund, the scheme will invest up to 100% of assets in money market and debt securities with maturity of up to 1 day. Thus key investments of Aditya Birla Sun Life Overnight Fund will include CBLO (collateralized borrowing and lending obligations) and repo/reverse repo in corporate debt securities. The cap on securitized debt investments of this scheme will be 25% of assets and this overnight fund will not invest in credit default swaps, foreign securities or engage in short selling/securities lending.
CRISIL CBLO Index will serve as the benchmark for the Aditya Birla Sun Life Overnight Fund. This CRISIL index tracks the performance of a money market portfolio with 100% CBLO allocation. However, the scheme from Aditya Birla Sun Life Mutual Fund will invest in other securities as well as which may result in considerable outperformance or underperformance verses the chosen index. The 1 year, 3 year and 5 year returns provided by this index have been recorded at 6.00% (as of 2nd October 2018), 6.50% and 7.24% as of 31th August 2018.
Aditya Birla Sun Life Overnight Fund will be managed by Kaustubh Gupta. Other debt schemes managed by him include Aditya Birla Sun Life Liquid Fund, Aditya Birla Sun Life Banking & PSU Debt Fund, Aditya Birla Sun Life Low Duration Fund and Aditya Birla Sun Life Short Term Opportunities Fund. Among these the Aditya Birla Sun Life Banking & PSU Debt Fund has emerged one of the top performers in its chosen category with returns of 7.95% and 9.31% over the 3 year and 5 year periods (as recorded on 3rd October 2018).