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JM G-Sec Short Term Plan

The fund's small asset base and a consequent short-term maturity have hamstrung the fund to deliver the minimum expected of a short-term gilt fund

JM G-Sec Short-term Plan, a variant of JM Gilt series targets investors with a short investment horizon. In its two years since launch, the fund has delivered a modest return of 10.33 per cent.

Against the aggressive member of the family, JM long-term gilt plans, JM G-Sec Short-term is at the other end of the spectrum with virtually 100 per cent cash portfolio for a large part of its tenure. The fund has been forced to remain in cash for its inability to acquire critical mass. Since inception, the assets under management have remained below Rs 1 crore and provide little leeway to the fund manager to invest in sovereign bonds. Thus, the fund has been invested only in money market instruments and that explains for its underperformance during the current market rally. During November, the fund was up by just 50 basis points, while an average short-term gilt fund gained 0.95 percent.

JM G-Sec Short-term has been an under-performer among its peers with a one-year return of 9.16 per cent against the category average of 12.02 per cent. However, this does not come as a surprise since a small asset base and a consequent short-term maturity have hamstrung the fund. This tiny fund is at a disadvantage to deliver the minimum expected of a short-term gilt fund.