Launched in 2002, the fund aims to remain fully invested in long-term debt and to an extent of 20 per cent in short-term debt.
Looking at its past performances it can be said the fund had a roller-coaster ride from the time of its inception. But, from the year 2008, the fund started beating its category on a consistent basis. The appointment of Ritesh Jain in June, 2008 helped the fund deliver a whopping 10 per cent return in the third quarter (July '08-Sept '08) vis-à-vis the category's 1.81 per cent. And, since then it has outperformed its category in every single quarter.
With interest rates on a roll, the fund took a back seat and invested in shorter maturity papers in comparison to its category. From July, 2004 the yield of the 10-year benchmark paper started moving upward, and the fund decided to adopt a conservative stance by shifting its exposure from long-term debt to shorter maturity instruments. By January, 2005 the allocation in the long term government bonds became nil and the corpus was shifted to safer and high quality T-Bills, Call money and Repo instruments with average maturity with the portfolio never exceeding one year till September 2008.
But Jain has prudently dabbled in maturity profiles according to the interest rate outlook. Keeping this in mind, the maturity of the portfolio was increased to 7.83 years (January 2009) from 1.25 years (October 2008) only to bring it down to 1.20 years (May 2009). Currently, (June, 2009), it is at 7.50 years.
The fund has taken some concentrated bets in the form debt papers issued by LIC Housing Finance Ltd. The allocation in Privately Placed Debt issued by the company went as high as 87 per cent in July, 2005, but this bet did not pay off as the fund's monthly return remained below its category for the month.
The fund manger has allocated large portion of its portfolio in financial sector debentures and long-dated government-securities besides holding certificates of deposit of Indusind Bank currently.
On expenses, the fund leans towards the higher side. As on March, 2009 it is as high as 2.05 per cent in comparison to the category's 1.47 per cent.