HSBC Short Duration Fund (formerly L&T Short Term Bond Fund) had a poor outing in 2022, owing to the reversal in interest rates. It returned only 3.22 per cent against the category median of 3.8 per cent. Dissect the performance further, and you realise the fund lost more when the debt markets tumbled in the second quarter of 2022 and then failed to capitalise during the subsequent recovery as well as its peers. The net result? It ranked among the bottom performers in 2022. What led to the underperformance? This fund is managed conservatively, much like IDFC Bond Fund Short Term Plan, its more popular peer. Interestingly, the reasons for the underperformance of the two funds in 2022 were also similar. This fund also had high exposures to bonds in the 3-4 year range in the initial months of the year. These bonds were deeply impacted by the rising interest rates and henc
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