Like the majority of funds in this category, HSBC Cash fund also takes minimal exposure to risk by maintaining a low maturity profile of 65-110 days. The fund's portfolio average credit quality is also on the higher side compared to typical ultra short-term offering. Nearly three-fourth of the fund's investments has been in the AAA-rated bonds and P1+ instruments, thus ensuring a higher safety of portfolio.
Though HSBC Cash fund is a relatively new addition to the category, it has shown enough proof of its stability. The fund's launch (in December 2002) was followed by one of the worst period in debt market, but it handled the volatility with comfort, gaining 1.43 per cent (annualised 5.72 per cent) in Q1 of 2003 -- in line with the category average. Even in the recent three months, the fund's worst 14-day return has been a decent 0.16 per cent (annualised 4.24 per cent). And of course, it has done relatively well in the ensuing good periods.
This fund has a lot going for it, including a reasonable expense ratio of 0.65 per cent (as on March 31, 2004). HSBC Cash fund could well become anyone's short-term parkway for its solid and consistent performance and high quality profile.