Tata Floating Rate Fund - NFO closes on 5 July 2021

The Tata Floating Rate Fund is a debt scheme that primarily invests in floating rate instruments. The NFO will go live on Monday and closes on 5 July. We bring you all the details.

Good to know Floating rate instruments These are debt instruments that pay variable or floating interest to its investors. These interest rates (also called as coupon rates) are adjusted or changed periodically—for instance, three or six months. Coupon rates on these debt instruments are based on various factors such as benchmark reference rates, credit rating of an issuer and the interest rate environment. The advantage of having floating rates is that it provides an opportunity to gain from a rising rate scenario. What is a benchmark reference rate? Interest rates of various financial instruments are pegged against the benchmark reference rates. In India, there are benchmark reference rates such as repo and MIBOR (Mumbai Interbank Offered Rate).

Investment objective

The fund aims to provide competitive and stable returns by adjusting to the evolving interest rate scenario. It will adopt a moderate risk strategy by investing in good quality (rated AA+/- or equivalent and above) floating-rate debt. The fund will also manage risk by having different tenures or duration papers.

Most importantly, with the inflation continuing to rise and economic activity gradually rebounding, Tata Floating Rate Fund is offering a debt portfolio for the upcoming rate cycle. If the Indian central bank decides to hike rates, the floating rate fund has the traits to take advantage of it.

In such a scenario, having coupon rates aligned with the changing interest scenario is extremely pivotal for investors. The fund provides much needed flexibility and diversity with respect to  the interest-rate cycle.

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Asset allocation

Instrument	Allocation (% of total assets)		Risk profile
	Minimum	Maximum
Floating Rate instruments (including fixed-rate instruments converted to floating rate exposures using swaps/derivatives)	65	100	Low to medium
Fixed rate debt securities, securitized debt, money market instruments	0	35	Low to medium
Units issued by REITs & InvITs	0	10	Medium to high

Scheme details

Name	Tata Floating Rate Fund
Type	An open-ended debt scheme investing predominantly in floating rate instruments (including fixed rate instruments converted to floating rate exposures using swaps/ derivatives)
Category	Debt floater fund
Investment objective	The objective of the scheme is to generate income through investment primarily in floating rate debt instruments, fixed rate debt instruments swapped for floating rate returns and money market instruments. However, there is no assurance or guarantee that the investment objective of the scheme will be achieved. The scheme does not assure or guarantee any returns.
Benchmark	CRISIL Ultra Short Term Debt Index
Load Structure	Entry Load (During the NFO): NA Exit Load: Nil
Fund manager	Akhil Mittal
Options	Regular and Direct
Minimum application amount (during NFO)	₹5,000 and in multiples of ₹1 thereafter
Additional application amount	₹1,000 and in multiples of ₹1 thereafter

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This product is suitable for investors who are seeking*:	Riskometer
Regular Income by investing predominantly in a portfolio of floating rate instruments (including fixed rate instruments converted for floating rate exposures using swaps / derivatives)

*Investors should consult their financial advisors if in doubt about whether the product is suitable for them.

Note: The above information has been sourced from the Scheme Information Document provided by Tata Asset Management Company Limited. To read the entire document, click here. Disclaimer RKSV Securities India Private Limited (ARN/Distributor - 107930; brand name Upstox) is the distributor of the mutual fund. Please consult your investment advisor before investing.

Mutual fund investments are subject to market risks, read all scheme related documents carefully.