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Mutual Fund Review: DSP BlackRock Short Term Fund

Name: DSP BlackRock Short Term Fund-G
Type: Open Ended Debt Short -Term
Fund Manager: Mr. Sujoy Kr. Das
Inception Date: September 04, 2002

Short Term Debt Funds are the investment option to park money for a short period of time, typically less than a year. These are relatively safer investment avenue and provide stable returns along with the preservation of capital. DSP ML Short Term Fund is an open-ended debt scheme and seeks to generate income commensurate with prudent risk, from a portfolio constituting of money market securities, floating rate debt securities and debt securities.

It is mandated to invest 50%-100% of its assets in debt & money market instruments having average maturity upto a year and floating rate debt securities whose coupons are reset at least once a year and 0-50% in debt instruments having average maturity greater than a year and floating-rate debt security where the next reset date is more than 367 days from the date of purchase. As per its latest disclosed portfolio, the scheme has allotted 19.4% of its assets in debt instruments and rest in cash and equivalent.
 
The scheme has acquired an impressive track record over the years and has comfortably outperformed its benchmark and peers during selected time period. Its focus on active duration management and credit calls helped it to deliver compounded annualized returns of 5.84% since its inception. Also over a short period of six months it has posted annualized return of 6.60 % while its benchmark and peers trailed with the returns of 5.96% and 5.51% respectively. Expense Ratio of the scheme is 0.84% as on May 31, 2006 which is lower than the category average of 0.88%.
 
The corpus of the scheme has grown 41% over a period of one year and stands at Rs 134 crore as on May 2006. The scheme has invested 39.7% of its assets in commercial paper, 18.56% in bonds and 24.74% in securitised debt comprising of good quality rated papers such as AAA and P1+. It has allocated 38% to P1+ rated papers, 14.86% in AA+ rated papers and almost 24.74% in AAA (SO) rated papers. Portfolio modified duration is 148 days as on May 2006. The fund has actively moved its assets between debt and liquid instruments over the last one year with average allocation in debt instruments at 36%.
 

Minimum investment amount is Rs 25000 and offers both growth and dividend options. The scheme is benchmarked against Crisil Liquid Fund index. It charges no entry and exit load.

DSP BlackRock Short Term Fund has been a consistent performer and is suitable for the investors who are looking for a safety of debt instruments with short term horizon.
 

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