This is an aggressive fund that has mostly generated returns to match. Its agenda is to actively vary its stance, based on the yield outlook. In the last two years, this has resulted in a volatile but satisfactory performance. The sudden monetary loosening towards 2008-end saw it go aggressively long and generate excellent returns. When the flip side started playing in 2009-mid, it made losses. However, for the investor who was looking to actively chase trends, the overall result was as desired.
The main objective of this fund is to generate income through a range of debt and money market instruments of various maturities to maximise income, while maintaining an optimum balance between yield, safety and liquidity.
The debt portion of the portfolio will be actively managed, based on the fund house's view on interest rates. By actively managing the portfolio, the scheme attempts to achieve its objective by way of both interest yield and capital appreciation. The portfolio may also include liquid assets and other short maturity assets, especially during rising interest rates.
Debt instruments with maturity of over ayear will form 70-90 per cent of the portfolio. Money market instruments (cash/call/reverse repo) and debentures with maturity of less than a year will form 30-100 per cent. Debt instruments may include securitised debt up to 60 per cent, while exposure to derivatives will be 50 per cent.
From a long-term perspective, the fund has managed to stay closer to the top of its peers for four years. All in all, it has done its job of actively anticipating yield trends to generate returns.
