DSP Mutual Fund launches US treasury fund of fund

DSP Mutual Fund on Thursday announced the launch of DSP US Treasury Fund of Fund, an open-ended fund-of-funds scheme investing in units of ETFs and/or funds focused on US Treasury Bonds.

The new fund offer or NFO of the scheme is open for subscription and will close on March 13.

The scheme will offer investors an opportunity to benefit from Fed interest rate policies by investing in US Treasuries. More than 95% of the fund’s assets will be invested in the money market, floating rate, short, medium and long-duration funds.

The scheme will be benchmarked against S&P US Treasury Bond Index. The scheme will be managed by Jay Kothari. The minimum application amount for lump sum and SIP is Rs 100 and any amount thereafter.

The scheme offers the opportunity to potentially earn higher interest income from elevated US yields, according to the press release by the fund house.

The scheme will offer regular and direct plans both with growth and IDCW options. “This is an opportune time for investors to look at the potential existing from elevated US Treasury yields and their probable fall. The design of the fund offers investors the potential to earn better returns through active management of interest rate cycles. DSP UST FoF is also a great option for those with future US-based expenses,” says Sandeep Yadav, head – fixed income at DSP Mutual Fund.The scheme’s investment objective is to generate income and long-term capital appreciation by investing in units of ETFs and/or funds focused on US treasury bonds. The proportion of investment in underlying funds/ETFs will be determined based on the discretion of the fund manager of the scheme considering prevailing market conditions, the macroeconomic environment (including interest rates and inflation), general liquidity and other considerations in the economy and markets. A fund manager can dynamically change the duration of the overall portfolio by adding or removing ETFs and/or funds.

The scheme is suitable for investors who are seeking long-term capital appreciation and are looking to generate income by investing in units of ETFs and/or funds focused on US treasury bonds.

The principal invested in the scheme will be at “very high” risk according to the riskometer of the scheme.