It manages interest rate risk by maintaining a low maturity profile. For example, except for a brief period in 2003, the fund's average maturity has never crossed 100 days. In fact, it has seldom touched even the 90 days mark.
The preference for safety is also reflected in the fund's portfolio-at April 2005 end, nearly 82.84 per cent of the corpus was invested in AAA and P1+ instruments. However, this cautious approach has not affected the performance of HSBC Cash fund-except for marginal underperformance during the first quarter of 2003, the fund has always outperformed its peers. This feat is commendable, as the fund's launch in December 2002 was followed by one of the worst periods in the debt market. But it handled the volatility with comfort, gaining 1.43 per cent (annualised 5.72 per cent) in Q1 of 2003.
HSBC Cash's expense ratio is reasonable-at 0.67 per cent, it's marginally above the category average of 0.62. A consistent performance since launch makes this fund an ideal choice for short-term needs.
This article was originally published on July 08, 2005.
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