This fund has been one of the better performers in the category but it seems to be losing some steam off late, especially ever since floating rate funds have been in focus around the beginning of this year. In the last six months of 2003, the fund's month-end returns had outperformed the category average in five of the six months. However, in the first six months of this year, the fund has generated returns only in line with the category average. This was largely on account of the fund taking lower interest rate bet – its average maturity had been falling steadily during the period and stood at 70 days as on June 2004.
As far as the composition of the fund's portfolio is concerned, in the AMC's own words, almost 65 per cent of the fund's assets are in floating rate instruments. Further analysing its holdings over the first half of 2004, throws light on the fact that almost 24 per cent of its assets have been in cash and cash equivalents, 40 per cent into money market instruments and the rest into corporate bonds and bank deposits.
Overall, the fund's portfolio is of a very high quality. Its term deposits are with nationalised and reputed private banks. Among other investments, almost 95 per cent are in AAA rated or P1+ rated instruments. Its expense ratio at 0.6 is also among the lowest in the category and highlights the fact that the fund is efficient in transferring the returns generated on its portfolio to its investors. Keeping these facts in mind, cautious investors should look favourably at investing in this fund.