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Slow Bloomer

Birla Sun Life Short-term Retail has evolved, albeit slowly, into a good investment pick in its category

Slow and steady wins the race, and Birla Sun Life Short-term Retail seems to testify that saying. In its initial 18 months, the fund failed to beat its category. However, slowly but steadily it gained momentum and from 2004 onwards, it started matching the Debt Short-term category. And by the end of 2007, the fund had become a top performer in its category.

Birla Sun Life Short-term Retail was launched in April 2002. The scheme aims to invest between 70 to 80 per cent in Debt and Money Market instruments having maturity levels of less than one year.

Overall, the fund’s portfolio largely contains AAA/P1+ rated papers on the higher side. Instruments rated below AA instruments constitute around 12 per cent of the net assets. For a brief period in 2005, the exposure went to around 30 per cent. As this move didn’t pay off, the average holding came down. The fund has been a heavyweight on instruments like Commercial Paper of ICICI bank. Exposure in Treasury Bills has also been as high as 88 per cent (2005).

The fund has maintained an average maturity period of the portfolio at low levels. It has been 266 days compare to its category’s 366 days.

On the expense side, the fund has staged a strong comeback. From a high of 1.01 per cent in 2005, the expense ratio had dipped to 0.30 per cent in March 2007. As on March 2008, it was 0.58 per cent vis-à-vis its category’s 0.79 per cent.