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Tata GSF - Growth

Tata GSF offers am impressive return of 15.99% return since launch. Even while returns looking impressive, Gilt fund with their volatility are meant for the longer haul

Tata Government Securities Fund (GSF) Growth option is a medium term gilt fund launched in August 1999. The growth option of the fund is managed differently from the dividend option.

Tata GSF focuses on investing in the medium and longer dated Government Securities or Gilts. With this maturity focus, the fund becomes susceptible to interest rate risk. Bond shed value when the interest rates are expected to fall and gain when they are expected to go down. This movement of bond prices with changing interest rate outlook is more pronounced in longer dated instruments. Thus while the gains from a longer dated portfolio are higher, the risks too are on the higher side. The risk of volatility in a Gilt fund is minimised over the long term.

With a Gilt focus, the fund surely offers a quality portfolio. While the fund's maturity through its tenure is not available, its portfolio suggests that the fund has followed an aggressive and active management strategy. While the fund smartly indulged in longer dated papers in times of a rally in early 2000 and 2001, it shifted with agility to a near cash position in the turbulent markets of mid 2000. This of course has been amply aided by the small corpus at Rs 33.60 crores. With this agile yet aggressive management the fund has been successful in beating its category average.

Tata GSF has well leveraged its small asset base to render a 15.99% return since launch, thus emerging a category topper. While the fund has been largely successful in its outlook on interest rates, in needs to be continued in the future, for a sustained performance. Even while returns looking impressive, Gilt fund with their volatility are meant for the longer haul. Further, investors need to comprehend the dynamics of a Gilt fund before considering the fund.