This relatively more aggressive MIP has performed exceedingly well. Its three-year annualised returns of 15.63 per cent (as on November 7, 2007) place it right at the top of the MIP category. More importantly, this has been the result of consistent out-performance. As a result, it has been among the few MIPs which have witnessed a rise in their assets after they hit a rough patch in 2004.
But the performance has come at the cost of higher risk. Its mandate permits it to invest up to a quarter of its assets in equities, and the fund generally remains close to this limit. As a result, it has a tendency to fall more during market declines.
In the 14 quarters of its performance history so far, the fund has under-performed only in two quarters (June 2006 and March 2007), and both of these were the ones went the market was bearish.
The fund has an impressive dividend record as well. Since 2005, it has not skipped dividend in any month under the monthly dividend plan. The rate of dividend has been consistent at 0.61 per cent for last 19 months.
The fund does not mind investing in stocks of smaller companies. As per its September-end portfolio, it had 54 per cent of its equity allocation in large-caps while the remaining was in mid- and small-caps.
On the debt side, the fund refrains from taking aggressive interest rate bets, but does invest in AA and lower rated papers. Of late, though, the average maturity has been on the rise and currently stands at 2.85 years. Corporate bonds are the mainstay of the portfolio while gilts generally remain below 10 per cent.
While the fund is among the most volatile in the category, all that risk has been worth the returns it generates. Lower expense ratio of 1.60 per cent is an added advantage here.
This article was originally published on January 01, 2008.
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