In a category where expenses matter the most, Canbank Mutual Fund manages to run Canliquid with remarkable economy. The fund charges just 0.4 per cent on an annual basis, while its average peer charges 0.7 per cent. This 0.3 per cent may not look much, but with the category's toppers and dud ones separated by a relatively narrow margin, this is Canliquid's biggest advantage.
For its initial one year, Canliquid has kept a higher average maturity in the band of 100-150 days. Thus, it largely benefited from the declining interest rate through 2002-03. But since March 2003, the fund's maturity has been in lower range of 50-90 days, thus managing the interest rate risk quite well. Though it has invested mostly in liquid P1+ instruments, but on bond side, it had a higher preference for below-AAA-rated bonds as compared to AAA bonds. However, witnessing volatility in the debt market in the last couple of months, it has reduced exposure in P1+ instruments in favour of cash and bank deposits.
Preservation of capital is the key attribute of any cash fund and this fund has so far been able to do that quite diligently. Overall, Canliquid is one of the better cash funds around for its stability and low expenses.