Kotak Bond Regular Plan has generated consistent returns since its inception in November 1999, yielding 9.72% per year.
Kotak Bond Regular Plan has generated consistent returns since its inception in
November 1999, yielding 9.72% per year.
The objective of the scheme is to create a portfolio of debt instruments such as bonds, debentures, government securities, money market instruments including repo to spread the risk across a wide maturity horizon and different kinds of issuers in the debt markets.
Ritesh Jain and Imran Sayed are the fund managers for the scheme. The performance of the fund since inception has been better than the benchmark - the Crisil Composite Bond Fund Index and also the peer group.
For a 1 -year period, the fund has delivered returns of 8.58%, which is better than the benchmark’s 5.75% and the peer group’s 6.14%.
The expense ratio of 0.89% is very impressive and is significantly lower than the category average.
The fund has allocated 77.94% of its assets in debt and 22.06% in cash and equivalent instruments. This allocation to various assets has changed over the quarter as the fund managers have adjusted for the prevailing volatility in the debt markets and the uncertain interest rate scenario.
The scheme currently managed assets worth Rs 37.46 crore. It has seen outflows in the last couple of quarters. This erosion in fund size is attributed to the overall trend in the debt market.
Income funds have come under severe pressure as interest rates have continued to harden.
Kotak Bond Regular Plan’s investments consist of quality rated corporate papers.
The fund has parked 31.63% of its net assets in dated gilts.
The higher allocation in government securities is partly responsible for the higher volatility in the portfolio.
The average maturity of the portfolio stands at 8.38 years, which has gone up compared to August 2007, when it was around 3.01 years.
The rise is attributed to heavy exposure in long-duration government securities. The fund manager is taking higher risk by investing in long-term maturity papers, which helped increase the scheme’s returns.
The scheme has 30.52% investments in non convertible debentures and 9.83% in commercial papers.
Debt fund investors can certainly look to invest in the scheme with a long term view.
By arrangement with mutualfundsindia.com, a unit of Icra Online
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