ASK Liquid Fund Launches: New Debt Scheme Targets Low-Risk Income for Short-Term Savers Amid Market Volatility

ASK Liquid Fund Launches: New Debt Scheme Targets Low-Risk Income for Short-Term Savers Amid Market Volatility​

The launch of ASK Liquid Fund marks a strategic entry into the debt category by ASK Mutual Fund, designed specifically for investors seeking stable, short-term savings solutions. This open-ended liquid scheme focuses on generating regular income through high-quality money market and debt instruments with a residual maturity up to 91 days. The fund is positioned as a low to moderate risk offering, aiming to provide necessary stability in the current financial environment.

Scheme Objective and Risk Profile​

The primary objective of ASK Liquid Fund is to generate consistent income by investing in a carefully curated portfolio of debt and money market instruments. These investments are restricted to securities with residual maturities up to 91 days, ensuring capital preservation and liquidity for unit holders.

In terms of risk assessment, the scheme itself is rated as Low to Moderate Risk. This classification is supported by an investment strategy focused on mitigating various financial risks. The fund benchmarks its performance against CRISIL Liquid Debt A-I TRI, a first-tier benchmark designated by AMFI that aligns with the scheme’s intended asset allocation.

Investment Strategy and Portfolio Constraints​

The investment strategy is actively managed, aiming to capture term and credit spreads within the limited time frame. The AMC assesses every opportunity based on credit risk, interest rate risk, liquidity risk, derivatives risk, and concentration risk. This rigorous approach ensures that investments align with the fund’s stated objective of safety and income generation.

The investment guidelines are strict, limiting exposures to maintain portfolio integrity. Specifically, the scheme is restricted from investing in unlisted securities issued by associates or group companies of the AMC, provided such exposure exceeds 25% of the net assets. Furthermore, a total cumulative gross exposure across debt, derivatives, repo transactions, and Credit Default Swaps must not exceed 100% of the net assets of the scheme.

Operational Details and Fund Commitments​

ASK Liquid Fund operates as an open-ended scheme, offering continuous sales and redemption at Net Asset Value (NAV) based prices. There is no entry load charged on purchases in this scheme. The fund commits to swift processing of transactions, dispatching redemption proceeds within three working days.

The fund structure incorporates various advanced risk mitigation tools. It employs a Liquidity Risk Management Framework (LRM) and an Asset Liability Mismatch (ALM) Framework to monitor liquidity requirements over 30 and 90-day tenors. The scheme also maintains appropriate stress testing mechanisms to evaluate the impact of market risks such as interest rate changes and credit quality deterioration on the portfolio.

The fund’s investment pool includes a diverse range of instruments, such as Government Securities, Commercial Paper (CP), Certificates of Deposit (CD), Repo/Reverse Repo transactions in corporate debt securities, and various securitized debt products like ABS and MBS. The AMC is committed to transparency and will disclose the scheme's portfolio on a fortnight and monthly basis via its website.