SBI Mutual Fund has introduced a new scheme that could provide more returns than Fixed Deposit. The name of the new fund offer is SBI Long Duration Fund. The NFO will remain open for subscription till December 20. 

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SBI Long Duration Fund is an open-ended debt scheme that will seek to generate regular income in the long term by predominantly investing in debt and money market instruments.

The scheme invests its corpus in debt and money market instruments in line with the investment objective to provide attractive risk-adjusted returns to its investors through active management of credit risk and interest rate risk in its portfolio. 

It aims to generate returns through investment in long-term bonds. As it is an open ended scheme, some portion of the portfolio may be invested in money market instruments to meet the liquidity requirements.

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Application details

SBI Long Duration Funds is an open-ended debt scheme that aims to generate regular income in the long term by primarily investing in debt and money market instruments. The minimum application for the scheme is Rs 5000 and in multiples of Re. 1 thereafter. In case the investor opts for Systematic Investment Plan (SIP), they will have to invest Rs. 500 and in multiples of Re.1.

Estimated Diversification

The Scheme may invest in securitized debt up to 40 per cent of the net assets and may invest in Repo in corporate debt as permitted by SEBI. It may also engage in stock lending up to 10 per cent of its net assets, but shall not engage in short selling.

The cumulative gross exposure through equity, debt and derivative position will not exceed 100 per cent of the net assets of the scheme. The scheme may invest in American Depositary Receipts/Global Depository Receipts issued by Indian Companies, subject to the guidelines issued by Reserve Bank of India and Securities Exchange Board of India.

The gross exposure to derivatives in the equity segment shall be restricted as per the individual equity asset allocation. Moreover, it may be noted that the Debt derivatives would be used only for hedging and portfolio rebalancing.

Exit conditions

If the investor exits the fund before a year, 1 per cent fee will be charged from the date of allotment. If the investor exits after 12 months (1year) from the date of allotment, then there will be no fees charged. Investors locking in the scheme for more than 3 years can avail the benefit of better tax returns. However, the SBI Mutual Fund clearly states that there can be no assurance or guarantee that the investment objective of the scheme would be achieved.

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