Targeted at Provident Funds, the fund seems to be conservatively managed to emerge an average performer. This is consistent with the fund's strategy of offering stable returns, with liquid and quality portfolio
28-May-2001 •Research Desk
Cangilt (PGS) , an open ended Gilt fund, is targeted at Provident Funds, Gratuity and Super-annuation Funds (PGS). With this focus on PGS, the fund invests in instruments as defined by Sec 2(2) of Public Debt Act, 1944.
With its investments dedicated at Government Securities or Gilts, the fund seeks to achieve risk-free return while maintaining stability of returns and liquidity. Gilts, with their Government backing, limit the credit risk of the portfolio, while enhancing liquidity. The fund has held on to a diversified portfolio of Government Securities across varying maturities.
While Gilts contribute well to the liquidity of the portfolio, they also increase the interest rate risk of the portfolio. Bonds lose value with interest rate hike and gain value when rates are cut with longer dated papers being more sensitive. Further, Gilts are more sensitive given their high trading activity. While the portfolio maturity is not available for comment, the fund's returns suggest that it has been actively yet conservatively managed, with a lower end portfolio maturity. While the conservatism has not taken the fund high on the performance ladder, it did come in handy when the debt markets turned turbulent.
With a one-year return of 10.14%, the fund lags its category, which has returned 11.88% over the same period. However, this is consistent with the fund's strategy of offering stable returns, with liquid and quality portfolio.