ICICI Prudential Short-Term Bond Fund is managed by Manish Banthia. He took over as the manager of this fund following in November 2009. Banthia joined the AMC in October 2005. Banthia has extensive understanding of the fixed income market with an overall experience of 13 years.
Investment Strategy
The fund employs an investment process with a focus on safety, liquidity and returns. Spread analysis is integral to his investment approach. Banthia runs the strategy between low to moderate duration and focus on higher accrual income by maintaining a high credit profile of the portfolio. He attempts to capture spreads between gilts and corporate bonds by studying historical spreads.
The execution of this process has been good with 60-65% that reflects his medium-term view while the remaining 35-40% of the portfolio is managed tactically to take advantage of any short-term movement in rates. Banthia manages the duration of the portfolio in the range of two to three years. The moderate duration strategy provides protection from the volatility and also benefits from the roll down perspective. The credit profile of the fund is skewed to superior credit quality fund. Banthia takes a tactical call through government securities and State Development Loans (SDLs) mainly at the short end and invests in the most liquid ones, thus aiming to keep liquidity risks low.
While there is no restriction on maintaining a certain minimum allocation to G-Sec in this strategy, the fund manager presently has a preference for maintaining a higher allocation to G Secs, given his views on the interest rate cycle and credit offtake cycle, as well as to manage the liquidity of the portfolio.
The fund is an excellent option for investors looking to invest into a stable and well managed short-term fund.
Portfolio composition
Some of the companies the fund has invested in include Bharti Airtel, Tata Sons, Axis Bank, NABARD, Power Finance Corporation, SIDBI and ONGC Mangalore Petrochemicals.
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