The fund has been in existence since September 2002, but, it made its mark only in 2008. With a return of 29.95 per cent, it was the best performer in its category, giving second highest return by any debt fund, ever. That was no stroke of luck. It performed superbly in 2009, with areturn of 6.84 per cent (category average, 0.24 per cent).
This open-ended debt scheme generates income through investments in debt and money market securities of different maturity and issuers of different risk profiles. The scheme will invest in money market instruments (with unexpired maturity of less than a year) and rated, unrated corporate bonds and debentures. The allocation to debt will vary between 80-100 per cent.
The fund manager actively manages the maturity of the portfolio. For most of 2008, the average maturity was less than aweek. But in September 2008, it shot up to 5.7 years and again came down to 1.25 years the next month. This nimble-footed strategy was again seen in 2009, when the fund took its average maturity to 7.5 years (June) from just 1.2 years (May 2009). Interestingly, over the past three years, the funds average portfolio maturity is lower than the category average.
The fund maintains a well-diversified portfolio with a mix of long- and shortterm instruments. In the last 18 months, it invested mostly in debentures (32 per cent), overnight paper (23 per cent), GoI securities, certificate of deposits (17 per cent) and treasury bills (13 per cent). Generally, it invests in P1+ rated short-term paper. It has never invested in below AA rated long-term paper.
The churning has come at a cost and it is among the most expensive funds in the category.
