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Mutual Fund Review: Kotak Bond Short Term Plan

Type: Debt Short -Term
Fund Manager: Laxmi Iyer, Ritesh Jain
Launch Date: 25- Apr- 2002
 
Kotak Bond Short term plan is typically aimed at short term investors with an investment horizon of one month or more, and the investment objective of the scheme is to provide reasonable returns and high level of liquidity by investing in debt and money market instruments of different maturities, so as to spread the risk across different kinds of issuers in the debt markets. Short Term Debt Funds are meant to park surplus money for a short period of time, typically less than a year and provide safety, liquidity and stability of returns.
 
As per its latest disclosed portfolio, the scheme has apportioned 78.88% of its assets in debt instruments and 21.12% cash and equivalent. In the last three months debt exposure has been pruned a bit.
 
The scheme was launched in Apr 2002, and has managed to generate above-average returns for the selected time frames. Over a period of three year it has posted compounded annualized return of 5.42% while its benchmark and category average lagged far behind at 2.95% and 5.22% returns respectively.

Expense Ratio of the scheme is 1.50% which is quite high compared to the category average of 0.88%.The scheme's risk profile is lower than the peer group average as indicated by standard deviation and beta.
 

 

Kotak Bond Short Term Fund -G

Peer Group Average

Std. Dev.

0.0083

0.0187

Beta (Slope)

0.0173

0.0268

 
 
 
 
The scheme presently manages a corpus of Rs 80.16 crores. The scheme has invested 33.38% of its assets in bonds, 19.10%% in commercial paper 45.5% in non-convertible debentures comprising of good quality rated papers such as AAA and P1+. It has allocated 87.99% to AAA rated and equivalent papers and around 9.97% in AA/AA+ rated papers. The average maturity of the portfolio is 336 days, which is higher than the category average of 276 days.
 
Kotak Bond STP has been in operation for quite sometime now, and has managed to deliver above average returns consistently. The scheme is less volatile in nature as compared to the peer group, and although the average maturity of the scheme is a bit on the higher side for a short term scheme, the high exposure to quality papers and its consistent track record combine to make the scheme an attractive proposition.
 
Minimum investment amount is Rs 50000 and offers both growth and dividend options. The scheme is benchmarked against Crisil Short-term Bond Fund Index. It charges no entry and exit load. The scheme is suitable for the investors looking for a safety of debt instruments and having short term horizon.
 

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