Why invest in Kotak CRISIL: IBX AAA Bond Financial Services Index Dec 2026 Fund in the current interest rate environment

Kotak Mutual Fund has launched a new passive debt fund NFO, Kotak CRISIL – IBX AAA Bond Financial Services Index Dec 2026 Fund. This is a target maturity fund, which will mature in about 2 years (December 2026). The fund will track the CRISIL – IBX AAA Bond Financial Services Dec 2026 index. The NFO opened for subscription on 31^st January and closes on 10^th February 2025.

What are target maturity funds?

Target Maturity Funds are a type of debt index fund that invest in fixed-income securities with a predetermined maturity date, which is aligned with the maturity profile of the underlying debt index. These funds follow a passive investment approach and hold securities until maturity

Target Maturity Funds are open-ended passive mutual fund schemes, offering a bond-like structure. They generate income primarily through coupon payments from the underlying bonds/securities, and upon maturity, investors receive the accrued interest along with the face value of the securities.

Benefits of investing in target maturity funds

• Target maturity funds have higher liquidity compared to Fixed Maturity Plans (FMPs). Unlike FMPs, you can redeem units of your target maturity funds at any time at prevailing net asset values (NAVs).


• Since the fund has a target maturity date, the duration of the fund reduces over time. Consequently, the interest rate risk also reduces over time.


• In a declining interest rate environment, you can lock in the current bond yield if you remain invested till the target maturity date. Since the underlying bonds of the benchmark index maturity at around the same time as the fund, there re-investment risk is mitigated.

Interest rate outlook

Why invest in Kotak CRISIL – IBX AAA Bond Financial Services Index Dec 2026 Fund?

• Opportunity for investors to lock in attractive yields till the maturity of the fund


• Moderate interest rate risk since the fund will mature in less than 2 years


• Credit risk is relatively low since the underlying bonds are of highest credit quality (AAA)

Investors should consult with their financial advisors or mutual fund distributors if Kotak CRISIL – IBX AAA Bond Financial Services Index Dec 2026 Fund is suitable for their investment needs.