As per latest data available, the assets under management of liquid plus funds have grown 944% to about Rs 77,152.32 crore as of September 2007.
Liquid plus funds are fast becoming the favourites of mutual fund investors. These offer a new investment option for the corporate treasury department that seeks better returns and tax efficiency at a slightly higher risk than liquid funds with comparable cost. Returns from liquid plus funds become sweeter as they are subject to lower taxes than cash funds.
As per latest data available, the assets under management of liquid plus funds have grown 944% to about Rs 77,152.32 crore as of September 2007 from Rs 7,384 crore in September 2006.
The category as a whole accounts for around 16.17% of the industry’s total assets under management which stands at close to Rs 5 lakh crore now.
A star performer in the overall liquid plus category is Principal Floating Rate Fund FMP which is managed by Ritesh Jain.
The fund seeks to generate steady and reasonable income with minimal risk, while maintaining a high level of liquidity.
It is suitable for investors with medium to long-term investment horizon as the fund manager has the flexibility to ascertain the average maturity of the portfolio with a view to maximise the returns.
The fund seeks to mitigate interest rate risk by investing 65-100% of its corpus in floating rate debt securities and the rest in in fixed rate debt securities.
The fund has outperformed its benchmark index (Crisil Liquid Index) and the peer group in all time frames. It delivered 8.10% returns for one month whereas the peer group gave 7.76% and the benchmark index yielded 7.33%.
A look at the credit quality of the scheme shows that the fund is heavily focused (94% of its investments) on good quality papers, followed by AA+ (4.34%), cash (1.08% in total portfolio and remaining 1% is invested in unrated papers.
The fund corpus has seen a rise of 2377.78% in the last year to Rs 4981.32 crore as of September 2007.
By arrangement with mutualfundsindia.com, a unit of Icra Online
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