VR Logo

Managing Volatility with Ease

The recent volatility in the debt market has really made debt investing a high-risk proposition. Investors wanting to negate the debt market volatility should look forward to Birla Floating Rate Fund

This fund has delivered above average return with low risk, making it an ideal investment option for those wary of the debt market's volatility. In nearly one-year of its existence, Birla Floating Rate Short-term fund has delivered 4.76 per cent return, which is better than the category average return of 4.65 per cent.

The fund takes lower interest rate-risk by keeping half of its portfolio investments in floating rate instruments (Mibor-linked). Though its average maturity has moved in a broad range of 5-19 months, the fund has managed to keep its volatility in check. The fund's average monthly return stands at 0.39 per cent – higher than the category average return of 0.37 per cent.

It has also taken lower credit risk by largely sticking to short-term P1+ rated securities and AAA-rated bonds. However, for a short period – April and May 2004 – it invested over 30 per cent into mid-quality bonds, but since then the exposure to these bonds have come down to 20 per cent.

This fund has a lot going for it, including a reasonable expense ratio of 0.84 per cent – in line with the category average. Thus, investors wanting to negate the debt market volatility should look forward to Birla Floating Rate Fund.