Abakkus MF takes first step with SEBI filing for its debut low-risk short-term liquid fund

Abakkus Mutual Fund, founded by veteran fund manager Sunil Singhania, has taken its first major step into India’s mutual fund space by filing a draft Scheme Information Document (SID) with the Securities and Exchange Board of India (SEBI) for its maiden offering — the Abakkus Liquid Fund. The move marks the formal entry of Abakkus into the Rs 80-lakh crore Indian mutual fund industry, less than three months after receiving SEBI’s final approval to begin operations.

Low-risk, short-term investment option

According to the draft filing, the Abakkus Liquid Fund will be an open-ended liquid scheme designed to provide short-term income through investments in debt and money market instruments with maturities of up to 91 days. The scheme carries a relatively low interest rate risk and moderate credit risk, classified as B-I under SEBI’s Potential Risk Class (PRC) matrix. Its benchmark will be the CRISIL Liquid Debt A-I TRI Index, a standard reference for short-duration debt schemes.

Units of the fund will be offered at ₹100 each during the New Fund Offer (NFO) period, with the opening and closing dates to be announced after SEBI’s review. The minimum lumpsum investment will be ₹1,000, with subsequent investments in multiples of Re 1. Investors can also opt for a Systematic Investment Plan (SIP) with a minimum of ₹500 per month and at least six instalments.

Fund structure

The Abakkus Investment Managers LLP will act as the Asset Management Company (AMC), while Abakkus Trustee Pvt. Ltd. will serve as the trustee. The SID notes that the document has been prepared in line with the SEBI (Mutual Funds) Regulations, 1996, and includes a due diligence certificate from the AMC.

The regulator’s review is pending, and SEBI has neither approved nor recommended the scheme at this stage. Once cleared, this launch will place Abakkus alongside a growing list of boutique fund houses expanding into the mutual fund space.

Launch Coincides with Moderation in Equity Inflows

The filing comes at a time when the mutual fund industry’s focus is shifting towards safer, short-duration products amid volatile equity markets. Data from the Association of Mutual Funds in India (AMFI) shows that equity inflows dropped 19% month-on-month in October to ₹24,671 crore from ₹30,405 crore in September. Analysts attribute this moderation to profit-booking after recent market highs and seasonal liquidity pressures during the festive period.

Despite this slowdown, the industry’s total assets under management (AUM) climbed to a record ₹79.87 lakh crore, up from ₹75.61 lakh crore in September, underscoring continued investor confidence in mutual funds as an investment vehicle.

Industry trend

Abakkus’s decision to start with a liquid fund mirrors a growing industry trend. Several new fund houses, such as Capitalmind Mutual Fund, are also launching liquid schemes first to establish a performance record before venturing into more volatile equity funds. Capitalmind’s proposed liquid fund, for instance, plans to invest up to 100% of its portfolio in short-term instruments like treasury bills, commercial paper, and PSU bonds, while maintaining at least 20% in highly liquid assets to meet quick redemption needs.

Why liquid funds are in demand

Liquid funds are witnessing renewed investor interest amid market volatility and high short-term interest rates. These funds offer:

High Liquidity: Investors can redeem units on a T+1 basis, with many funds offering instant withdrawals up to a daily limit.

Low Risk: Their exposure to market fluctuations is minimal, as underlying assets mature within 91 days.

No Lock-In: Unlike fixed deposits, liquid funds have no lock-in period, offering flexibility.

Stable Returns: While returns vary with market conditions, they generally exceed traditional savings accounts.

Capital Preservation: The focus remains on safety and liquidity, appealing to conservative investors seeking short-term parking for surplus funds.

Outlook

With Sunil Singhania at the helm, Abakkus’s entry into the mutual fund space is being closely watched. The Abakkus Liquid Fund aims to provide investors with a low-volatility, short-term debt option at a time when market participants are diversifying away from equities. Once SEBI approval is granted, the fund’s performance will likely set the tone for Abakkus’s future offerings across debt and equity categories.