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A Defensive Player

After performing well in 2003 and 2004, the fund put up an average performance last year. The fund will appeal to those looking for a conservative MIP

This three-star fund was launched in February 2000. After putting up decent performance in the first year, the fund hit a rough patch during 2001, the year in which it finished at the bottom of the category. An average allocation of 7 per cent to the equities during the year, which was the highest in the category, hurt the fund's cause.

But since then, the fund took to the path of recovery. It started hitting its maximum allocation limit of 15 per cent to the equities since the second quarter of 2003, a time when the equity markets were about to begin their uphill journey. The fund manager was bang on with his timing and the results get reflected in the fund's performance during 2003 and 2004 when it finished comfortably ahead an average peer. However, 2005 has been quite an average year for the fund, when it delivered returns of 9.12 per cent, marginally behind the category's 9.40 per cent.

On the equities side, the fund has been exploiting the permitted allocation to the full in the last two and a half years or so. Large-caps have dominated, though mid- and small-caps account for around 30 per cent of the equity portfolio.

On the debt side, the fund manages its interest rate risk actively, and is currently a little aggressive on its maturity profile. Since the start of 2004, the fund's average maturity has been around 2 years, which is on the higher side in the category. The fund has significantly improved upon its credit quality as compared to its earlier days. Unrated papers and below AA rated papers have become extinct from the portfolio, unlike the situation in 2002 and 2003 when the allocation to them ran into double digits. The AAA rated corporate bonds are the mainstay of the portfolio while the fund manager keeps moving in and out of gilt securities from time to time.