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Birla Income Plus

Given an active yet conservative fund management, a quality portfolio and impressive track-record has yielded a 13.35 per cent total return for Birla Income Plus. Take call on the fund for steady return from a fixed income portfolio.

Birla Income Plus (BIP) has been a consistent performer in its relatively long track record. In 2001, year to date, the fund is up 12.06 per cent against the average return of 11.58 per cent from 35 medium term debt funds. The two-year return of 12.98 per cent is also well above the category average of 12.81 per cent.

In its initial years, BIP was largely invested in corporate bonds to rake in higher yields. The returns were also boosted with the decline in interest rates in the ensuing years. However, with a growing asset base and steady fall in coupon income from corporate debt, the fund increased its allocation to government securities in late 2000. Today, the fund follows an internal guideline, which restricts exposure to a single corporate entity, business groups and unrated instruments. According to fund manager, Ramanathan.K, "Our exposure to unrated papers has come down significantly and is around 6 per cent today. This comprises of high quality debt like HSBC, HDFC bank, etc. Further, our incremental exposure to unrated debt has been predominantly in short term papers."

Within the corporate debt segment, a higher allocation to AAA rated instruments has also lent quality to portfolio. The exposure to lower rated bonds, which peaked at 30 per cent in July 2000, has been pruned to 18 per cent in the recent times. On occasions, the fund has hiked its allocation to G-Secs, guided by its interest rate outlook with active tuning of portfolio maturity. For instance, the gilt exposure climbed up from an average 15 per cent in 2000 to 42 per cent in May 2001 with declining interest rates. However, with current uncertainty in debt markets, the fund has reduced the gilt exposure to 27 per cent. The portfolio maturity also stands reduced from an all time high of 5.16 years in May 2001 to the current 4.28 years. The active realignment helped the fund reduce losses in September – it marginally underperformed the category average (-0.22%) with a one-month loss of 0.28 per cent.

Given its active yet conservative fund management, a quality portfolio and impressive track-record with a 13.35 per cent total return, Birla Income Plus could be well suited for a steady return from a fixed income portfolio.