Prudential ICICI's floater has managed interest rate volatility by either holding on to cash equivalents or investing in short maturity debt instruments. As a result its average maturity has never exceeded 88 days. Despite this, it has managed to remain a pace ahead of its peers as far as generating returns is concerned.
Like others in its category, the fund has managed to preserve investors' capital. Its best and worst performance over any 30-day period has been 0.63 per cent and 0.25 per cent, respectively. Moreover, its year-to-date performance has been quite credible, as it has consistently managed to better both the category average as well as the NSE Mibor. This year, the fund has bettered the category average returns in four of the six months.
The standout feature of this fund is its exceptionally low average maturity, which has never exceeded 88 days, though to be fair there were periods when the fund's portfolio was primarily invested in cash and cash equivalents. Currently, the average maturity of the fund stands at 80 days and that in spite of the fact that it has only 28.5 per cent in cash and bank deposits. However, its holdings are of a very high quality – AAA and equivalent investments (including cash) account for almost 83.5 per cent of the total corpus.
So far it has been quite successful with its strategy of managing interest rate volatility by investing in short maturity debt instruments. Whether, this will continue to prove beneficial only time will tell.