This fund (earlier called the Zurich India Liquidity Savings Plan) plays a relatively safe hand. It avoids credit risk by investing bulk of its assets in AAA-rated bonds, short-term P1+ instruments and bank deposits, and limits interest-rate risk by keeping its average maturity within a narrow range.
Still, this does not mean that it has not been actively managed. At times, it has taken higher risks and has been successful too. For instance, just before the repo rate cut of August 2003, it raised its average maturity from 62 days in June 2003 to 160 days in July 2003, thus making smart gain post rate cut. The fund did well even during bad months like that of February 2004 when it managed to deliver top quartile returns because of its 30 per cent investments in bank deposits. Consequently, its portfolio maturity has come down to 77 days in February 2004.
And let's not forget low expenses, which goes a long way in enhancing a fund's return. HDFC Cash Management Saving Plan currently charges 0.54 per cent per annum (as per March 31, 2004 disclosure) - 0.14 per cent lower than the category average.
Whether its monthly or quarterly return, HDFC Cash Management Saving Plan has always delivered something extra than average cash fund. All in all, this fund is one of the suitable cash funds for anyone who has a short-term investment horizon and seeks liquidity at short notice.