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Monday, January 18, 2016

BNP Paribas Flexi Debt Fund

 BNP Paribas Flexi Debt Fund - Invest Online
 

Outlook & Views:

 

Ø  Post the surprise action by the Central banker of cutting rates by 50 bps on September 29, 2015. The market moved its focus on the economic data releases and FOMC meeting.

 

Ø  Headline WPI for September 2015 stayed in the negative zone at -4.50% with continued sluggishness in the international crude oil prices and other commodity prices. Given a below average monsoon, we expect primary product categories such as vegetable and pulses to see some upward price pressure. Headline CPI for September at 4.4% was above expected levels, due to higher than anticipated core inflation.

 

Ø  This is the last of base effect related adjustment month. Food prices are expected to see m-o-m price build-up due to higher vegetable and pulses prices. Core inflation (ex- transport & communication) has gone up and likely to remain sticky. However, this still is likely to under-shoot RBI's target of 6% for January 2016.

 

Ø  Industrial production remained buoyant at 6.4% in August 2015. Manufacturing growth showed momentum continuing at 6.9%, higher than last month's 4.6%.The most important change within the industrial data is pick-up in durables goods and capital goods output. This is heartening as it might be the early signals of a build-up in capex cycle.

 

Ø  The FOMC held the federal funds rate steady at its October meeting and also left its forward guidance essentially unchanged. The Committee did downgrade its concerns over the impact that recent international developments would have on economic activity and inflation in the US thus leaning toward a December 2015 rate hike.

 

Ø  Going forward, eyes will be on the US economic data i.e the employment rate as well as the other labour data strengthening the argument for a December FED rate hike.

 

Ø  Domestically, we would be focusing on the inflation prints and further outcome of the Bihar state elections results where a win will improve the ruling party's position in the upper house of the parliament and will give a required impetus to the passing of impending structural reforms.

 

Ø  We believe with the country growing short of the potential growth rate, need to spur the activity with lower lending rates on the back of much improved macro-economic fundamentals. There is a scope of RBI to lower rates by at least 25 bps in next 6 months. We expect 10 year to trade in the range of 7.10-7.25 in next 6 months.

 

Highlights of BNP Paribas Flexi Debt Fund:

 

BNP Paribas Flexi Debt Fund is dynamically managed debt scheme, which takes active calls on duration, movement along the yield curve as well as the shift in the yield curve. The scheme seeks to generate alpha over the benchmark and the strategy is to capitalize on duration opportunities as they appear. The duration of the scheme will tend to be longer if the fund manager feels that the interest rates are falling or moving down and vice versa. When the view on interest rates is neutral, the fund manager prefers to hold a short duration portfolio, as the flexibility to realign is higher. Active management of duration tends to generate high returns. The fund has the flexibility to invest in corporate bond, money market instruments and government securities.

 

Investment Philosophy:

 

Ø  Its been dynamically managed debt fund, Which will take active calls on duration, Movement along the yield curve as well as the shift in the yield curve.

Ø  The duration of the scheme will tend to be longer if the fund manager feels that the interest rates are falling or moving down and vice versa.

Ø  When the view on interest rates is neutral, the fund manager prefers to hold a short duration portfolio, as the flexibility to realign is higher.

Ø  Active management of duration tends to generate high returns.

SCHEME HIGHLIGHTS:

 

Ø   The scheme seeks to generate alpha over the benchmark and the strategy is to capitalize on duration opportunities as they appear.

 

Ø  Robust risk management framework, controls, policies & procedures helps the scheme maintain quality portfolio.

 

Ø  Suitable for investors with a investment horizon of 6 months above and wish to take advantage

of a dynamic debt market..

 

Ø   The fund has the flexibility to invest in corporate bond, money market instruments and government securities

 Performance Comparison :
 

Report as on November 18, 2015

 

Simple Annualised % (Point to Point)

Compounded Annualized  % (Point to Point)

Scheme Name

1 Month

2 Months

3 Months

6 Months

9 Month

YTD

1 Year

2 Years

3 Year

BNP Paribas Flexi Debt Fund(G)

-1.5509

6.8494

8.7248

7.5816

5.3444

7.4404

9.8505

10.5848

9.9217

HDFC High Interest Fund-Dynamic Plan(G)

-2.4903

7.8579

8.8668

8.0908

4.4264

6.9319

9.0469

11.5408

9.6211

ICICI Pru Income-Reg(G)

-3.1914

8.2022

9.5342

8.2574

4.7451

6.8403

9.1613

11.8235

8.2459

IDFC Dynamic Bond-A(G)

-4.8609

5.5877

8.2040

7.8326

4.3573

6.8266

9.3337

10.7295

9.0826

Kotak Bond Fund - Plan A(G)

-4.0034

7.2061

8.3713

7.8524

4.1544

6.1926

8.1806

10.6517

7.9476

Reliance Dynamic Bond(G)

-2.7441

7.7131

8.8023

7.8359

4.6773

6.7960

9.0323

10.9213

9.1458

SBI Dynamic Bond(G)

-4.8787

6.0265

8.6761

8.0722

4.5123

6.8752

9.3302

9.7547

8.0669

UTI Bond Fund(G)

-2.6615

8.1586

8.6762

8.5168

5.4679

7.4272

9.5592

11.2655

9.1908

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