Kotak Floater Short-term has not only managed to deliver stable returns since its launch in July 2003 but also, and more importantly, has been fairly successful in guarding these returns from downside.
As can be gauged from the fact that the fund has outpaced the category average return in seven of the 11 months of its tenure. The fund's best and worst period returns have also been quite applaudable when compared to peers, which for any 30-day period are 53 per cent and 36 per cent, respectively. This is inspite the fact that the fund has one of the highest expense ratios in the category.
In the last six months, its portfolio on an average consisted of nearly 47 per cent of AAA-rated bonds, alomost 31 per cent of P1+ instruments and 21 per cent of cash and money market instruments. This is a ample indication that the fund's holdings are of superior quality. Also, the fund has struck to its objective of investing in floating rate instruments, as in AMC's own words, the fund's exposure in these instruments on an average has been around 40 per cent. The average maturity of the fund in the first five months of 2004 hovered in a narrow range of 7-7.5 months. However, in June the average mautrity of the fund crossed eight months, an indication of long duration bonds in its portfolio.
Nonetheless, as floaters have become a preferred flavour for those who don't want to ride the interest rate volatility wave, this floater is a place to be in, especially for cautious investors.
This article was originally published on August 26, 2004.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
