Among the major category underperformers has been DWS Premier Bond Fund - Regular Plan which is an open-ended debt scheme.
Name: DWS Premier Bond Fund - Regular Plan-G
Type: Open-ended debt income
Fund manager: Suresh C Soni
Inception date: January 21, 2003
The recent hardening of interest rates and indication of rates going up further in the days to come has made the category of income schemes unappealing to the general investing public. Among the major category underperformers has been DWS Premier Bond Fund - Regular Plan which is an open-ended debt scheme. The investment objective of the scheme is to provide regular income by investing in debt securities, including debt and money market instruments.
As per its latest disclosed portfolio, the scheme has apportioned 81.45% of its assets into debt instruments and the rest into cash and equivalent. The fund has actively allocated funds between cash and debt instruments with around 75% of the assets being invested in debt instruments on an average in the last one year.
DWS Premier Bond Fund has grown at 4.78% annually. The scheme has not performed well and has been languishing at the bottom of the tables. It has failed to outperform its benchmark in the selected time periods.
Over a period of one year, the scheme has posted a compounded annualised return of 1.71%, while its benchmark and peers were ahead with returns of 3.1% and 4.37% respectively. As on July 31, 2006, it had an expense ratio of 2.01%, higher than the category average.
The scheme manages a tiny corpus of around Rs 3.21 crore, compared to over Rs 600 crore just a couple of years ago, which is indicative of the lack of interest in income schemes.
It has invested 40.13% of its assets in non-convertible debentures, 22.5% in bonds and 3.01% in pass through certificates. Majority of its portfolio comprises good quality rated papers such as AAA and AA+. It has allocated 53.03% to AAA rated papers, 12.60% in AA+ rated papers and almost 18.81% in sovereign instruments.
The average maturity of the portfolio as of July is 6.24 years, which is higher than the category average, thereby forcing it to price risks. Average maturity has gone up over the last quarter.
Overall, the tiny fund size, together with its higher average maturity and higher expense ratio has taken a toll on the scheme’s performance in the last one year, in an otherwise lacklustre debt markets.
The scheme requires a minimum investment of Rs 5,000 and offers both growth and dividend options. It is benchmarked against Crisil Composite Bond Fund Index. It charges no entry load but exit load of 0.5% is levied for investment up to Rs 10 lakh, if redeemed within 3 months.
By arrangement with mutualfundsindia.com, a unit of Icra Online
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