VR Logo

Tata GSF - D

Management of interest rate sensitivity, has seen Tata SGF-D at the top of its category. However, given the interest rate risk embedded in the fund investors should seek it for a longer horizon

Tata GSF - D is a gilt fund focussed on investments in Government Securities or Gilts. While entry in to the fund is on a no load basis exits with in 30 days face a load of 0.5%. The fund has consistent track record of dividend pay out with quarterly frequency aggregating to 19.19. Provident funds are also permitted to invest in the plan.

Tata GSF is a debt fund, which seeks regular pay out with a Government Securities or Gilt oriented portfolio. Gilts carry a sovereign backing and thus carry very low chances of default. However, for this added safety, these instruments pay a lower coupon.

Bonds lose value in times of a rate hike and gain value with a cut in interest rates, with this being more pronounced in longer dated papers. Also, with Government Securities being more liquid reflect this variation sharply. With Tata GSF holding a mandate to invest in longer dated instruments, the fund is exposed to interest rate risk.

The fund has sought to manage this with an active portfolio churning strategy. For instance, in the volatile times of July 2000, the fund held on to a totally liquid portfolio, and in the current bullish market the fund has stretched its maturity to 9.1 years, to capture the gains at the higher end of the yield curve. Its small size at Rs 35 crores has amply aided this nimble footed strategy.

With active management of interest rate sensitivity, the fund has posted a return of 16.78 since launch to end up in the top of its category. Active management notwithstanding, there is the implicit interest rate risk embedded in the fund - the best and worst returns amply reflect this. Thus, investors should seek the fund for a longer horizon to iron out any intermittent volatility.