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Debt Funds Impress in November

Mutual fund industry's debt category has posted steady, if not sensational, returns for the month

For the month of November, gilt yield softened. The yield of 10-year gilts dropped by 56 bps (basis points). The trend for the whole of the month was downward, after peaking at 7.43 per cent it reached a low of 7.16 per cent on the last Friday of the month. But by Monday it again flared up on the fears that positive gross domestic product (GDP) numbers might drive the central bank (the Reserve Bank of India) to tighten the cash reserve ratio (CRR) further.

If that happens, the cost of money for the economy will rise. Hence, on the last trading day of the month, the yields hardened by 5 bps to 7.23 per cent. Inflation is not helping matters either. It is increasingly becoming a matter of concern as food inflation for the month went up further to 15.6 per cent.

The impressive part was that, barring one fund, all the rest stayed in the green.

Ultra Short-term

In November, this category came back to the point that it occupied in September by posting a meager return of 0.28 per cent. This is however, a slight change from what it posted in October, when it had gone down lower than September figures to stand at 0.27 per cent. The performance of the category has been dipping ever since the Securities and Exchange Board of India’s (SEBI) rule restricted portfolio maturity to 91 days and this is evident in its 3- and 6-month returns, which stood at 0.84 and 1.81 per cent respectively. The year-to-date (YTD) returns given by this category was 4.17 per cent. 

Out of a total of 57 funds in this category, each and every fund stayed in the green, while Fortis Overnight Regular Fund again topped with a return of 0.45 per cent, though it registered a slight dip from 0.52 per cent in the last month. 

Floating Rate

Long-term Floating Rate funds in comparison to their Short-Term counterparts continued to post better returns in November. The latter posted 0.33 per cent returns in comparison to 0.48 per cent posted by Long-Term Floating Rate funds. None of the Long-Term Floating funds had posted negative returns during the month, while in October, Tata Floating Rate LT was down 0.12 per cent. None of the funds in the Floating short-term category have posted negative returns. 

Liquid Plus & Short-Term

Liquid Plus, a long-term variant of liquid funds, gave returns of 0.37 per cent, which was, more or less, equal to what they had done in October. However, Short-Term funds posted better returns in November at 0.68 per cent as compared to 0.43 per cent in the last month. In total, five funds delivered above one per cent returns, while UTI Short-Term Income Regular Fund posted the maximum return of 1.40 per cent in the Short-Term category. While the YTD returns of the Short-Term category stood at 6.15 per cent, for Liquid Plus, it was 5.05 per cent.  


This variant of debt funds continued its upward trend in quite a robust manner as it posted returns of 0.94 per cent in November compared to October when it posted 0.27 per cent return. DBS Chola Triple Ace was the best fund in the category, giving returns of 1.96 per cent after it had managed 0.57 per cent in the previous month to November. None out of the total of 57 funds went into the red, though Baroda Pioneer Income posted minimal returns of 0.04 per cent and thereby, also became the worst-performer.  This was good news, when compared to October when seven funds were in the red. The YTD return of this category was 0.94 per cent. 


The most volatile of the debt category (Medium- & Long-Term) did not have much of a story, though they managed to garner a somewhat decent 1.09 per cent, but they remained in the red as far as YTD returns were concerned. They have since then dipped 6.84 per cent. Although none of the funds under this category posted negative returns in November, in October, 29 funds out of 50 had posted negative returns. 

The short-term category in this class posted a 0.5 per cent return in November. This comes after 0.13 per cent in the month of October, down from 0.32 per cent in September. Their YTD returns stood at 0.79 per cent. The story was somewhat similar here as well. While none of the funds gave negative returns in November, three of its funds were in the red in October.


Monthly Income Plan (MIP) investors had something to cheer about this November after the category came out in the green having logged a dismal performance in October. They posted 1.65 per cent returns in comparison to minus 0.43 per cent in October when it broke its 7-month streak of positive returns. Tata MIP Plus gave maximum returns at 2.60 per cent though 10 other funds, apart from it, posted returns above two per cent. The YTD return of this category stood at 13.64 per cent. Only one fund has posted negative returns in November and this was the Baroda Pioneer MIP, which gave returns of -0.5 per cent.


Gold prices have been soaring and they touched their peak on November 26 at Rs 17,890 per 10 grammes. This category posted the highest monthly return of 10.78 per cent in November for the year 2009, while its YTD return was a robust 29.33 per cent. 

Category Gainers
FundCategory/Benchmarks   1-Month   1-Year   YTD
Debt: Floating Rate Long-term 0.48 6.67 5.56
Debt: Floating Rate Long-term Inst 0.53 7.29 6.30
Debt: Floating Rate Short-term 0.33 5.75 4.81
Debt: Floating Rate Short-term Inst 0.30 5.22 4.46
Debt: Liquid Plus 0.37 5.95 5.05
Debt: Liquid Plus Inst 0.40 6.25 5.26
Debt: Medium-term 0.94 8.81 0.94
Debt: Medium-term Institutional 0.97 7.52 -0.70
Debt: Short-term 0.68 10.03 6.15
Debt: Short-term Institutional 0.68 9.75 6.11
Debt: Speciality 0.36 6.75 5.57
Debt: Ultra Short-term 0.28 4.83 4.17
Debt: Ultra Short-term Institutional 0.32 5.51 4.75
Gilt: Medium & Long-term 1.09 4.70 -6.84
Gilt: Short-term 0.50 3.91 0.79
NSE G-Sec Composite Index  -0.59  3.48  -5.90
NSE MIBOR  0.28  3.90  3.34
NSE Treasury Bill Index  -0.12  5.43  5.11
VR Bond  -0.17  4.02  -0.44
Hybrid: Monthly Income 1.65 19.58 13.64
VR MIP  1.87  18.67  13.11
Gold ETF 10.78 33.38 29.33
Returns as on 30 November, 2009