Skip to main content

Mutual Fund Review: Birla Sun Life Government Securities Long-Term Plan

 

THIS open-ended scheme intends to generate returns by investing in central and state government securities. They carry a sovereign guarantee that insulates them from a default on principal and coupon payments. Given the continuous increase in interest rates by the Reserve Bank of India over the last one year to tackle inflation, short-term interest rates have increased substantially from the year ago period. However, when the rates begin their decline after peaking, gilt funds would benefit, as bond prices and yields share an inverse relationship. Thus, when government bond yields fall, these prices would rise and impact the gilt fund returns positively.

The fund has outperformed its peer group over a one, two, three and five year time-frame. It has outperformed its benchmark (I-Sec Li-Bex) over two and three year time-frames. Over a two year period, the fund gave a compounded annual growth rate of 8.15 per cent as against 4.68 per cent of the benchmark and 3.18 per cent of the peer group. Over a three-year period, the fund returned 12.82 per cent annualised, as against 8.13 per cent of the peer group and 10.56 per cent of the benchmark, respectively. A sum of `1,000 invested in the fund from March 31, 2002 would have returned `2,025 as on June 30, 2011. A similar investment in the benchmark and the peer group would have returned `2,019 and `1,907, respectively.

The fund has followed a dynamic strategy of managing interest rate risk in relation to the category peers. It was observed over the last 36 months, the average maturity varied from one day to 9.55 years. At the category level, the average maturity varied from two years to 14.5 years over the same period. Typically, longer duration (higher average maturity) government securities are marked-to-market whereas shorter duration securities are treasury bills, bought at a discount and redeemed at face value. As bond prices rise when yields fall, it benefits higher maturity government bonds that are marked to market. Vice versa, when yields rise, short maturity securities benefit as they are redeemed faster, thereby giving higher returns commensurate to the yields.

It is important for investors to look beyond the returns while selecting funds. Thus, portfolio attributes play acrucial role in fund selection. In the case of gilt funds, Crisil mutual fund ranking methodology looks at liquidity, average maturity and asset quality, besides risk-adjusted returns.

Crisil measures liquidity of the gilt securities based on three parameters – turnover of the security, the number of days for which it is traded, and the number of trades that took place for the security during the quarter. In the latest ranking of March, the fund is in the top cluster on all the parameters (both risk adjusted returns and portfolio-based).

-----------------------------------------------------------------

 

Also, know how to buy mutual funds online:

 

Invest in DSP BlackRock Mutual Funds Online

 

Invest in Reliance Mutual Funds Online

 

Invest in HDFC Mutual Funds Online

 

Invest in Sundaram Mutual Funds Online

 

Invest in Birla Sunlife Mutual Funds Online

 

Invest in IDFC Mutual Funds Online

 

Invest in UTI Mutual Funds Online

  

Invest in SBI Mutual Funds Online

 

Invest in L&T Mutual Funds Online

 

Invest in Edelweiss Mutual Funds Online

 

 

 

Popular posts from this blog

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...

Myths about Exchange Traded Funds (ETFs)

1) ETFs Are Similar to Individual Stocks: Like MFs, ETF consist of an underlying portfolio of securities that's designed to follow a specific index or investment strategy. Hence, they are as diversified as various mutual funds. 2) ETFs Only Invest in Equity: Since they are listed on the exchange, the general belief is that ETF only consists of equity asset class. Globally, ETFs are available across asset classes – equity, debt, commodities, real estate and so on. In fact, over the past couple of years, India has also seen the emergence of Gold ETFs. 3) All ETFs Are Index Funds: ETF started as a fund which used to track indices and hence they were branded as index funds that are listed. However, ETFs have progressed rapidly and are no longer associated only with passive index funds. Globally, we have seen the launch of actively-managed ETFs. In India, also we recently saw the emer gence of fundamentally-weighted ETFs on Nifty, which busts the myth that ETFs are index funds and can...

What are the factors affect the changes in Interest Rate of Fixed Deposits?

  What are the factors affect the changes in rate of Fixed Deposits? Fixed Deposits are now considered to be a very old fashioned method of saving, but still attract many investors since they have guaranteed returns at the end of the tenure of the investment at a decent interest rate. There are various factors that affect the rates of interest for a Fixed Deposit. Policies of the Reserve Bank of India   - The several norms and restrictions posed by the Reserve Bank of India , in order to gain optimum control over credit and inflow and outflow of fund throughout the country. The repo rate changes, cash reserve ration tends to change and these changes affect the banking products like Fixed Deposits, loans etc. Recession   - When unemployment in a country crosses the benchmark set Recession hits, and slowly the country faces an economic slow movement, affecting the purchasing power of the people in the country, forcing the Reserve Bank of India to release more funds in the financial marke...

REC Tax Free Bond Issue

Tax Saving Mutual Funds Online Current open Infra Bond Application form   Download REC Tax Free Bond Application Forms REC (Rural Electrification Corporation) is going to issue tax free bonds and the issue will open on March 6 2012 and will close on the 12th of March 2012 When you buy 80CCF infrastructure bonds, the amount you invest in those bonds get reduced from your taxable income but in these bonds that's not going to be the case. The interest on these bonds will be tax free and they are similar to the other tax free bonds like the HUDCO, NHAI and PFC issues. For the two of you interested in knowing this – these bonds are tax free under Section 10(15)(iv)(h) of the Income Tax Act. Now on to the issue itself and let's start with the high credit rating that the issue has got. The REC tax free bond issue has been given the highest rating by all issuers since the government owns the majority stake (66.8%) in REC, it has been consistently profit making,  this is a se...

Good Loan

Why Is It A Good Loan?: Loans against gold are cheaper and better than personal loans as the former are available at lower interest rates. In contrast, the interest rates on personal loans are not standardised and can vary from bank to bank. Also, a personal loan depends on a host of factors including, the borrower's salary, profession and the purpose for which the loan is being taken.      For instance, the interest rate on a personal loan of 5 lakh falls in a wide range of 15-30%. But loans against gold are available for as low as 11%. Secured borrowing such as a loan against gold, investments or property is cheaper because it is backed by some assets, which command a good value at any point of time. If the borrower defaults on the loan, the banks can liquidate the assets to settle the loan account.    Being a secured loan, the risk of default and credit losses is significantly lower in this loan compared to other forms of loan for personal use. Given the lower risk, gold loa...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now