DSP Mutual Fund announced the launch of DSP US Treasury Fund of Fund (DSP UST FoF), an open-ended fund of funds scheme investing in units of ETFs and/or Funds focused on US Treasury Bonds. The Fund offers investors an opportunity to benefit from FED interest rate policies by investing in US Treasuries. More than 95% of the fund's asset will be invested in money market, floating rate, short, medium and long duration funds.
DSP UST FoF offers the opportunity to potentially earn higher interest income from elevated US yields. US Yields are at an elevated level and are near 10 & 20 year highs. This presents an opportunity for investors to park money at a higher interest rate. Investors also have the opportunity to earn mark to market gain from higher duration portfolio when yields fall. The quantum of rate hike in US have been higher as compared to India; accordingly, probability & quantum of decline in yields can be potentially higher in US compared to India.
Active management of duration is another advantage. Performance of different bond categories varies with rate cycle. Active Management with dynamic duration calls can help investors to navigate US interest rate cycles & potentially earn better returns. INR has depreciated vs USD over the years. Having exposure to USD can help investors earn from INR depreciation.
US Treasury is typically considered a safe haven in times of distress & hence can play pivotal role in asset allocation. Increased demand for USD as well as US Treasuries during times of crisis often leads to outperformance. Investors who plan for US-based expenses like higher education need to factor both US Inflation as well as INR Depreciation. US Treasury Bonds could help them account for both.
The New Fund Offer for DSP UST FoF will open for subscription on March 7th, 2024, and will close on March 13th, 2024.
"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, DSP Mutual Fund.
Find out more about the fund here. |
