Studying the macroeconomic scenario for taking an interest rate directional view forms the broader framework of the process
Suyash Choudhary is a competent manager and boasts an overall work experience of over 16 years in portfolio management. He joined IDFC Mutual Fund in October 2010.
Investment strategy
Choudhary's strength lies in his in-depth understanding of the macroeconomic environment, ability to anticipate interest-rate movements, and ability to identify attractive investment opportunities across market segments. The fund's investment strategy is rather straightforward, which is to scout for opportunities in the government bond segment. While the fund stays clear of credit risk and to a large extent liquidity risk, what differentiates it from similar offerings is the duration play, which is a mainstay of the strategy.
Choudhary plies a free-flowing investment approach, which allows him to invest across the yield curve. Fundamental research therefore forms the crux of the strategy. He is also willing to take big bets against the norm if he believes the risk/reward is favourable.
Given that duration is an integral part of the strategy, studying the macroeconomic scenario for taking an interest rate directional view forms the broader framework of the process. The interest rate direction is determined by conducting a detailed analysis of various influencing factors, such as, growth versus inflation, fiscal and current account deficit, private sector and government borrowings, fiscal and monetary policy view, money supply, currency market movement, and global interest-rate scenario, among others. This is complemented by an overlay of technical factors where the team examines the demand supply dynamics to get clarity on valuations and direction of yield curve.
While constructing the portfolio, he does not mind holding some illiquidity if he expects his view to play out over a longer period of time and can, therefore, continue to maintain the position for a relatively longer time frame. However, if he believes that he is closer to the end of his view cycle, he ensures that the portfolio is flexible and liquid.
Trailing returns
The fund has outperformed the benchmark over the one, three, five and 10-year periods
Portfolio composition
The fund's portfolio consists of the 2028-7.17%-government security, which makes up for over 24% of the holding. Rest of the portfolio consists of state development loans of Gujarat, Karnataka, Maharashtra and Tamil Nadu.
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Given that duration is an integral part of the strategy, studying the macroeconomic scenario for taking an interest rate directional view forms the broader framework of the process. The interest rate direction is determined by conducting a detailed analysis of various influencing factors, such as, growth versus inflation, fiscal and current account deficit, private sector and government borrowings, fiscal and monetary policy view, money supply, currency market movement, and global interest-rate scenario, among others. This is complemented by an overlay of technical factors where the team examines the demand supply dynamics to get clarity on valuations and direction of yield curve.
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