Fund takes calls on short-term rates

The fund manager adopts a two-pronged strategy to manage this fund. The investment team first develops a view on interest rates and then integrates these views to build core and tactical positions based on the fund mandate. While 60%-80% of the fund's portfolio reflects the strategic long-term view, 20%-40% of the portfolio is invested tactically to take advantage of changes in short-term interest rates.

The fund manager primarily uses G-secs / SDLs to take advantage of any short-term market movements. The fund manager carries out spread analysis across various maturity papers and a yield curve analysis across tenors to determine specific papers that he wants to invest into. The investment process is designed to generate excess returns by focusing on duration-management and yield-curve positioning.

The investment strategy is research-intensive and relies mainly on fundamental research. The call on duration is taken by studying the macroeconomic scenario. The investment team also incorporates the views on factors such as gross domestic product growth, inflation, fiscal deficit, and trends in government borrowing, which are important for managing this fund.

In a bid to attain the best possible yield, the manager takes tactical calls using short-term influencing factors such as liquidity conditions in the market, inflation, money supply, market sentiments, trader positions, open market operations by the Reserve Bank of India, auction/issuance of securities, and monetary factors. The fund is a solid option for investors looking to take advantage of interest rate movements through G-secs.

Prashant Pimple is a competent manager and has 15 years of experience on the fixed-income side.