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Birla Income Plus

Weathering the market ups and downs, this fund has consistently delivered the goods. Solid management and steady performance from an evenly diversified bond portfolio makes the fund a good choice among its peers.

Weathering the ups and downs Birla Income Plus has consistently delivered the goods. Its diversified mix of government bonds and high-yield corporate issues has produced solid long-term returns without undue volatility. Till 2000, the first five years it relied heavily on high-yield corporate bonds to fuel its returns. And in recent years, the strong performance of the fund's enhanced government securities position has kept it comfortably ahead of its average intermediate-term bond peer.

The fund got a big lift in 2001, soon after it enlarged its position in government bonds. Timely adjustment of portfolio maturity also contributed to the fund's recent success. These moves helped the fund change its track, but big duration and sector shifts (government and corporate bonds of varying credit) are infrequent. Birla Income Plus takes a more hands-off approach, with a fairly constant mix across bond sectors. The exposure to AA rated bonds is at 9 percent, while unrated bonds account for 7 percent. But the fund manager argues that corporate bonds are of high quality and the unrated issues though technically unrated could be superior to top rated bonds. The case in point -- bonds of HDFC Bank, Hongkong Bank, GE Shipping and Ashok Leyland.

The fund's approach is not flashy, but it has certainly paid off with above average returns over most time periods.

Overall, we like what this fund brings to the table - Solid management and steady performance from an evenly diversified bond portfolio. All this makes Birla Income Plus a good choice among available intermediate-term bond funds.