It was first off the block, making it the eldest in the 'extended' cash or short-term debt fund category. Hailing from Stanchart Grindlays' pure debt family, this fund aspires to earn superior returns than cash fund and court less risk than its medium-term cousin. The trendsetter's success saw other AMCs join the bandwagon. What's more, Grindlays Super Saver's tight-fisted approach helped it keep recurring expenses lower than the category average and even less than some of its cash buddies, giving it a leg up on its rivals.
Launched in December 2000, this year the fund has trailed its rivals who came into the world much later. However, in trailing 1-year the fund has earned 62 bps more than a cash fund. That apart, this fund has held on better than a debt fund whenever the latter went for a toss, signifying its less risky disposition.
Starting with a top-quality portfolio, the fund after acquiring size fell for the temptation offered by below AAA bonds -- of higher yield. Incidentally, around the time in June 2001, below AAA instruments were on a high. Since then on an average the fund has parked about 8% of its assets in these instruments. But don't mistake that for compromise on quality. Although its AAA stake has been trimmed from 50% to 33% now, it's made way for top-rated commercial papers -- up from 24% to 56%.
With gilts a strict no-no so far, CPs act as a liquidity buffer especially as this fund has been vulnerable to redemption in recent times. Its attempt at stretching maturity has come a cropper. For instance, in February this year, the fund enhanced its maturity from 5.52 months to 9.60 months. The result: its 1-month performance got slammed.
However, these slippages shouldn't disturb your sleep. In fact, Grindlays Super Saver is a sleek choice now that debt funds have turned volatile. While investors won't be blown away by its performance, we think low volatility, high-quality focus and appetite for yield enhancement will make it a good choice for conservative investors. Remember though that fund's run in rough sea is yet to be tested.
This article was originally published on July 09, 2002.
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