Though it lagged in its initial years, Birla Sun Life Floating Rate LT Ret has galloped ahead over the past few years to make its mark
The first three years were not exceptionally great for Birla Sun Life Floating Rate LT Ret whose performance began to stand out in 2007 and 2008. This year too has been good. The fund delivered a return of 4.07 per cent over the past 6 months ended October 31, 2009 and is the third best performer among its peers. Yet, the assets under management saw a dramatic drop in September 2009 over the previous month.
As per the mandate, majority of the fund's investment has been in floating rate paper. During the years from 2004 to 2008, such instruments were given an allocation of more than half of the portfolio, at times even crossing more than 90 per cent. This year, the allocation to floating rate instruments has consistently dwindled to nothing. However, Certificate of Deposits (CDs) and Commercial Paper (CP) have gained a more significant presence. Though the average maturity has always been low, it has increased slightly this year.
The expense ratio is a bit of a concern. It dropped from 0.85 to a low of 0.27 last year. Though still on the lower side, it has crept up to 0.44. Hopefully it should stay there.
