JM G-Sec PF Fund, seeks to provide safety through its investment exclusively in sovereign securities or Gilts. The fund is exclusively for investment by Provident, Pension and Superannuation funds.
Launched in September '99, JM G-Sec PF Fund has in its brief tenure given chart busting returns. With its gilt focus, instruments which have the sovereign backing, it has obviated any problems arising on the credit quality and liquidity front. Thus the fund is left only with interest risk to handle. Thus a fall in interest rate would see a rise in the prices of debt instruments and vice versa with the maximum impact on longer dated papers and more so in Gilts. This explains the higher volatility in the Gilt funds vis-à-vis other bond funds.
JM G-Sec Regular Fund is an aggressively managed fund with investments in long-dated papers. However, despite it having stretched the maturity to the long-end during steady markets, the fund was able to check its down side during the times of volatility in debt markets when interest rates came under pressure. Despite, the rise in interest rates in July 2000, the fund continued with positive returns while many of its peers turned in the negative territory during the volatility between May to July 2000. With the IMD inflows reinstating steady markets, the fund has again gone on the longer end as can be deduced from the portfolio. Currently the fund has an average maturity of 10.4 years and is well positioned to capture the gains of the current rally. The fund continues to be among the top performers.
JM G-Sec Regular Fund may have yielded exceptional returns. However, given the aggressive management and concentrated portoflio, any mistake on the call on interest rate outlook, the fund could be a severe casualty.