Fund bets on AAA-rated bonds

The fund house has positioned this fund as a high-quality low-risk product within the short-duration category. For instance, the modified duration is typically maintained between 1.5 and 2.0 years. Additionally, the manager prefers staying clear of credit bets in this fund and hence invests primarily in AAA/equivalent rated securities. The idea is to not cut corners with unwarranted risks and avoid adding volatility in the fund.

Studying the macro-economic scenario for taking 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 examine the demand supply dynamics in order to get clarity on valuations and direction of yield curve.

For investments in corporate bonds, the team lays lot of emphasis on the promoter group, its track record and corporate governance standards. Additionally, the fundmanager also looks at companies competitive standing vis-à-vis peers, its practices, cash flows, liquidity profile, business and financial risks among others. The fund is a solid option for investors looking for lower risk short duration funds.

Suyash Choudhary is the fundmanager