Alliance Cash Manager (ACM) aims at income with superior liquidity through a portfolio invested 100% in high quality short-term Debt and money market securities
10-Aug-2001 •Research Desk
Alliance Cash Manager (ACM) aims income with superior liquidity through a portfolio invested 100% in high quality short-term Debt and money market securities.
With a portfolio of AAA rated instruments only, Alliance Cash Manager ACM is sharply focused on credit quality by design. This coupled with its conservative stance on the interest rates, the fund proves to be safest among the cash funds. A no-load fund, its facilitates redemption proceeds within 24 hours.
ACM invests only in AAA corporate bonds and P1+ rated securities. Being on top of the credit quality, these instruments provide strong protection against defaults and eliminates both credit and liquidity risk. But the fund has been very conservative on the interest rate front. The investment charter permits a weighted average maturity of 1.5 years but the fund has maintained an average maturity ranging between 1 to 2 months.
To achieve this the fund picks instruments, which fall within this short maturity spectrum. The fund has also been increasing its exposure to corporate debenture with a short-term residual maturity as against in money market instruments earlier. This would help the fund limit its downside risk in the midst of current uncertainty. However, the fund limits exposure to T-bills, which are most susceptible to interest rate changes among short-term instruments. Instead, it earns a regular coupon income from a basket of call money, corporate debentures and commercial papers. Though, the strategy has yielded the fund returns below that of JP Morgan Treasury Bill Index, its performance is only in line with its focus for lower risk with a quality focus.
With a total return of 9.10% since launch, Alliance Cash Manager is not on top of the performance ladder, but it is a good short-term cash parking vehicle for its quality orientation and superior returns over the short-term bank rates.