The fund has outperformed teh benchmark over the one, three, five and 10-year periods
Shobhit Mehrotra is an experienced and skilled manager. He joined the fund company in February 2004 and has been running this fund since September 2007.
Mehrotra seeks to add value through security selection rather than taking duration bets; the duration is typically maintained within a thin band.
Investment strategy
Expectedly, the investment approach relies on fundamental research. It entails combining qualitative aspects with quantitative analysis. The investment team prepares the coverage list with a strong focus on the company management and track record, financial strength of the promoter group and corporate governance standards. Meetings with management are followed by rigorous quantitative analysis in which the focus is to get a measure of the company's creditworthiness. The team studies the company's cash flow and relevant ratios – leverage, coverage, and solvency.
The fund company uses a proprietary model in which qualitative and quantitative inputs are used to arrive at a credit score for each issuer. This in turn helps managers determine the exposure they can take to each issuer, thereby acting as a risk-management tool — for the individual portfolio and the fund company as a whole. Here the investment team lays more emphasis on risk control, thereby focusing on balancing safety, liquidity and return. We think the investment process is thorough and that the manager and team are at home with the process.
The fund is a suitable investment option for investors looking to take moderate interest rate as well as credit risk.
Trailing returns
The fund has outperformed teh benchmark over the one, three, five and 10-year periods.
Portfolio composition
Some of the companies the fund has invested in are HPCL-Mittal Energy, Reliance Utilities and Power, LIC Housing Finance, PFC, HDFC, HDFC Bank, REC, Syndicate Bank and Indiabulls Housing Finance.
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The fund company uses a proprietary model in which qualitative and quantitative inputs are used to arrive at a credit score for each issuer. This in turn helps managers determine the exposure they can take to each issuer, thereby acting as a risk-management tool — for the individual portfolio and the fund company as a whole. Here the investment team lays more emphasis on risk control, thereby focusing on balancing safety, liquidity and return. We think the investment process is thorough and that the manager and team are at home with the process.
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