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SBI Long Duration Fund NFO Reviews

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SBI Long Duration Fund NFO

SBI Long Duration Fund NFO Reviews & Features – Should you buy the new NFO launched by SBI Mutual Fund ? New fund offer (NFO) by SBI Mutual fund i.e. SBI Long Duration Fund, which opened on December 12 and will be on till December 20, 2022, 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. 

NFO are as similar to IPO wherein a company launches its IPO to fund its expansion and further operations for growth. 

Key Features of SBI Long Duration Fund 

  • The minimum amount of investment is Rs 5,000 and thereafter, in multiples of Re. 1.  
  • The benchmark of the scheme is CRISIL Long Duration Fund AIII Index. 
  • NFO will invest in government securities, Long term bonds etc. which is suitable for investors looking to invest in a reasonable credit quality portfolio
  • This is an open-ended fund, investors can withdraw their money at any point of time. 
  • Investors locking in the scheme for more than 3 years can avail the benefit of better tax returns. 
  • There can be no assurance or guarantee that the investment objective of the scheme would be achieved.  

PROS:
  • 1. Invest in good quality bonds
  • 2. Investing in long-term government securities (G-Secs)

CONS:
  • 1. Investments in long-duration funds face high-interest rate risk compared to those in short-duration funds. When interest rates go up, bond prices fall, and vice versa.
  • 2. For debt fund investments held for more than three years, capital gains booked are taxed at 20 percent with indexation.
  • 3. The SBI Long Duration Fund will have a relatively high-interest rate risk and moderate credit risk. 

Income Tax

For debt fund investments held for more than three years, capital gains booked are taxed at 20 percent with indexation.  

Also Know – How To Get Loans Against Mutual Funds From HDFC Bank ?

Bottom Line

For investors looking at long-term investments in bonds, this can be an attractive investment option. The fund house collects the coupon and keep investing it in bonds of similar maturities.

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