It delivers superior annual performances and has often been a top quartile performer. Of the 29 quarters of its existence, the fund has underperformed in just four. Though it’s dynamic mandate allows it to take bets across the yield curve, the average maturity has exceeded four years only twice, at one time touching 11.
On the other hand, there is no hesitation in taking large cash exposures with allocation going to a fifth of the portfolio on numerous occasions. This conservative approach has resulted in a low volatility product but also in missed opportunities.
The fund refrained from high maturity bets when yields fell in the quarter ended December 2008. The fund's portfolio maturity was just 2.68 years in December 2008 (category average: 8.15 years). The fund delivered 4.79 per cent that month (category average: 8.23%).
Large asset base, low (although fluctuating) expense ratio, low volatility coupled with good returns gives investors a good deal of comfort.
This article was originally published on March 21, 2012.
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