It grabbed the opportunity by managing its portfolio aggressively and keeping a high average maturity of 95 to 130 days. Investors got the reward for sticking to this aggressive newcomer-the fund raced to the top quartile in Q2 and Q3 of 2003 and since then has never underperfomed the category even in a single quarter.
The fund balances out its aggression by keeping a huge chunk of the portfolio in AAA papers. However, it maintains a decent exposure to below AA-rated papers (nearly 8 per cent in the last one year) for that extra return.
Exposure to gilts, cash and money market instruments keeps fluctuating depending on the mood of the debt market. For instance, when the bond market turned unfavourable in the first quarter of 2004, it raised its exposure to bank deposits, thus protecting returns. Since mid-2004, the fund has been constantly increasing exposure to AAA papers. At present, they account for more than two third of the portfolio. At 0.65 per cent, the fund's expense is marginally above the category average of 0.62 per cent.
This article was originally published on July 04, 2005.
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