ABN AMRO Flexi Debt Regular was launched in September 2004. The fund’s mandate states that it aims to optimally balance yield, safety and liquidity. And to achieve this, the fund enjoys ample flexibility. The fund can invest in both short-term as well long-term maturity debt instruments and securitized debt.
In the last two years, the fund has turned in a good performance with annualized returns of 8.39 per cent in 2007 and 8.42 in 2006. These returns have been way head if its category averages of 7.62 and 5.96 per cent.
These higher returns have been achieved because the fund has been quality conscious by investing around 70 per cent of its assets in AAA- and P1+-rated papers. Exposure to below AA-rated papers has been around 8 per cent during most times although it went up to as high as 40 per cent in July 2007, a move which helped the fund generate higher returns.
The fund has been known to take big bets on the interest rate outlook. In July 2005, the average maturity of the fund was 11 years. The fund has also seen radical movements in its average maturity, which went up to 4000 days in July 2005 and came down to 1 day in January 2008.
Since January 2007, the fund has maintained exposure in Commercial Paper, Certificate of Deposit and Debentures issued by both public and private sector banks. As on June 2008, Commercial Papers issued by corporates like Marico Limited and Apollo Tyres accounted for 39 per cent of the fund’s portfolio.
On the expense front, the fund has managed to be in control. Its expense ratio came down from 2.25 per cent (September 2005) to 0.73 per cent (March 2008), marginally below its peer which was 0.78 per cent.