Prajna Capital - An Investment Guide

This time we give you an insight into something that most debt fund investors would be unaware of, the Average Portfolio Maturity. As we all know, debt funds invest in bonds and securities. These instruments mature over a certain period of time, which is called maturity. The maturity is the length of time till the principal amount is returned to the security-holder or bond-holder. A debt fund invests in a number of such instruments and each of these instruments would be having different maturity times. Hence, the fund calculates a weighted average maturity, which would give a fair idea of the fund's maturity period. For example, if a fund owns three bonds of 2-year (Rs 30,000), 3-year (Rs 10,000) and 5-year (Rs 20,000) maturities, its weighted average maturity would be 3.17 years. What is the big deal about average maturity then, you may ask. Well, knowing a fund's average maturity is important because it tells you how sensitive a fund is to the change in interest rates. It is ...

Birla Sun Life's standout performers tend to be its debt funds. The fund house is very strong on the debt side with the bulk of its debt assets in cash funds. Some of its gilt and short-term funds stand out. What's interesting about this fund house is that the fixed income team always takes a call and does not necessarily follow the consensus. That makes it understandable that the Birla Sun Life roster includes some of the best as well as some of the worst debt funds. Of its 14 funds which boast of a 5-star and 4-star rating, just one is an equity offering. Not surprising since equity assets stand at just around 17 per cent. None of the equity funds, barring Birla Sun Life Equity, are star performers. Birla Sun Life AMC is a joint venture between the Aditya Vikram Birla Group and Sun Life of Canada, with an equal stake. Besides the mutual fund business, Sun Life has equal partnership with the AVB group in financial distribution and stock-broking businesses and is also a partne...