Do not go by the consistent yearly dividend payouts (dividend is reinvested) in Dhanraksha '89. Dhanraksha '89 has so far paid 10 yearly dividends. While the dividends in the first three years were between 12.5%-13.5%, since '93 the rate of dividend has been at best 10%. The fund has so far in its tenure of close to 12 years yielded a meagre return of 7.7%, which in real terms, considering the rate of inflation, would still erosion turn out to be erosion of capital. With its NAV currently ruling only marginally above par, it may not come as a surprise if it skipped this year's dividend. With returns even lower than a short-term debt fund, the first name, Dhanraksha, has proved to be a misnomer.
The analysis of the fund's performance does have a constraint in terms of non-availability of the portfolios prior to 1997. Further, the fund still does not disclose the quality and average maturity of its debt portfolio. Dhanraksha '89, is a conservatively managed debt oriented balanced fund with an average 70% in debt instruments. However, despite the high allocation that, were largely held for a steady coupon income given the high interest rates ruling in the earlier years of the decade, the fund has yielded very poor returns with its equity portfolio proving to be a bane. A medium quality portfolio and thinly spread over excessive number of stocks diluted the returns from the debt component rather than propelling them. Though, the fund seems to have exited a few of its illiquid counters in 1999, it continues to be overly diversified. That explains the mere 11% return in calendar 1999. Besides, during the peak of the rally in the early part of 2000, the fund had 9% accounted for by the infotech sector. With technology subsequently battered, the allocation was enough to rock the boat. The fund in calendar 2000 lost 1.66% in that year, though far less than its aggressive peers.
Though, currently the fund has a quality equity stocks, that is equally dividend between growth and cyclical sectors, nothing much can be said about the quality of predominant part of its portfolio comprising of debt. Besides, the fund is yet to prove a credible stock picking strategy, which ails even other equity funds of the AMC. Add to it, the poor disclosure norms. Also given a more than 50% allocation to Debt, the fund will have to bear the dividends tax for its dividend payouts.