The objective of the Scheme is to generate credit risk-free returns through investments in sovereign securities issued by the Central Government and/or State Government(s) and/or any security unconditionally 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.
The scheme will be actively managed and will aim to identify securities which offer optimal level of yields/returns, considering risk reward ratio. The scheme will have a minimum investment of 80% of total assets in government securities across maturity and balance amount can be invested in other debt and money market instruments. Money Market securities include cash and cash equivalents. The Scheme could invest in fixed income securities issued by central and state government in line with the investment objectives of the Scheme and as permitted by SEBI from time to time. The Scheme may invest in overseas debt Securities in accordance with the requirements stipulated by SEBI and RBI from time to time. On occasions, if deemed appropriate, the Scheme may also participate in auction of Government Securities. The Scheme will seek to underwrite issuance of government securities if and when permitted by SEBI/RBI and subject to the prevailing rules and regulations specified in this respect and may also participate in their auction from time to time. However, if the Scheme does enter into an underwriting agreement, it would do so with the prior approval of the Board of the AMC/Trustees. With the aim of controlling risks, rigorous in depth credit evaluation of the debt and money market securities proposed to be invested in will be carried out by the Risk Management team of the AMC. The credit evaluation includes a study of the operating environment of the company, the past track record as well as the future prospects of the issuer, the short as well as longer-term financial health of the issuer. The AMC may consider the ratings of such Rating Agencies as approved by SEBI to carry out the functioning of rating agencies. In addition, the investment team of the AMC will study the macro economic conditions, including the political, economic environment and factors affecting liquidity and interest rates. The AMC would use this analysis to attempt to predict the likely direction of interest rates and position the portfolio appropriately to take advantage of the same. Further, the Scheme may invest in other schemes managed by the AMC or in the Schemes of any other Mutual Funds, provided it is in conformity with the prevailing Regulations. As per the Regulations, no investment management fees will be charged for such investments. The Scheme may use derivative instruments like Interest Rate Swaps, Interest Rate Futures, Forward Rate Agreements or other derivative instruments for the purpose of hedging, portfolio balancing and other purposes, as permitted under the Regulations. Hedging using Interest Rate Futures could be perfect or imperfect, subject to applicable regulations. Usage of derivatives may expose the Scheme to certain risks inherent to such derivatives. It may also invest in securitized debt. For detailed derivative strategies, please refer to SAI. The Scheme may undertake repo transactions in corporate debt securities in accordance with the directions issued by RBI and SEBI from time to time. Such investment shall be made subject to the guidelines which may be prescribed. The Scheme may engage in Stock lending of securities in accordance with the framework relating to securities lending and borrowing specified by SEBI. The scheme may follow certain in-house model using quantitative and fundamental inputs. The model may be developed in order to manage the scheme and to help the scheme attain its investment objective. These models are based on various broad market parameters prevalent in the market and are dynamic in nature.
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