DBS Chola Liquid Fund is a very short-term fund with investments in fixed income assets of residual maturity of one year or less.
DBS Chola Liquid Fund is a very short-term fund with investments in fixed income assets of residual maturity of one year or less.
The fund manager’s strategy is to invest in highest rated instruments that are liquid in the secondary market. The fund is actively managed, with the duration ranging from 50 to 120 days. Ashish Nigam is the fund manager.
The scheme has been a decent performer in the liquid funds category and has managed to remain in the top quartile at most times.
The fund has an asset base of Rs 518.85 crore as of September 2007, which has come down in the recent months.
The investment objective of the scheme is to generate reasonable returns while maintaining safety and providing the investor superior liquidity.
To achieve this objective, investment will be predominantly made in a well-diversified and highly liquid portfolio of money market instruments, government securities and corporate debt.
The current asset allocation pattern suggests that the scheme has invested 16.05% in cash, 12.04% in corporate bonds and a major share is in commercials paper (71.91%).
In the current portfolio, the fund has invested in quality rated papers — AAA/P+ and equivalent papers form 83.95% of the portfolio.
The average maturity of the scheme currently stands at 186 days and it has gone up over the last month.
The scheme has been in existence for seven years - it was launched on October 9, 2000. It has outperformed its benchmark Crisil Liquid Fund Index as well as the category average often.
For the last three, years it has yielded 6.35% (compounded annualized), while the benchmark and peer group gave 5.93% and 5.88%.
For the last six months, the scheme has generated annualised returns of 6.85% whereas Crisil Liquid gave 6.69% and the peer group was 7.15%.
The fund is suitable for investors who have large cash surpluses and want to stay invested for a shorter period. The fund does not charge any entry/exit load. The minimum application amount is Rs 10,000.
The expense ratio of the scheme is 0.31%, which is lower than the category average.
By arrangement with mutualfundsindia.com, a unit of Icra Online
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