With debt investors expecting double digit returns; HDFC MIP Long Term has delivered. With 25 per cent of assets committed to equity, it has been amongst the most aggressive in its category. As of September 30, 2007, only two MIPs (of a total 38) maintained an exposure of more than 25 per cent to equity. Given the fabulous rally in equities since its inception, it is no wonder that the fund stands unbeaten; managing a fifth of the category's assets under management and ranking ahead of its peers based on pure returns.
Within its equity portfolio the fund sticks to a long term strategy, with little churn in the portfolio. The fund has however shown more aggression in the debt side. While traditionally the fund has shown a preference for high quality AAA rated paper, this year there has been a move to extract higher yields and look at AA and below rated papers. Since June this year the average maturity period of the fund's debt holdings has also increased.
A higher maturity profile in turn makes the fund more sensitive to interest rate changes. This may well be a tactical move in expectations that henceforth interest rates will move south. While the fund in itself has not witnessed many bear phases, its equity portfolio manager fills in the gap, he is amongst the most experienced in the industry. There has been a discernible improvement in the fund's performance during down phases. Over the recent slide during the quarter of March 2007, the fund delivered a 0.76 per cent increase, safer than the average category's loss of (-) 0.31 per cent. All in all, an aggressive fund that keeps costs consistently below average and diligently distributes dividends is how you can describe from the fund.