CANARA ROBECO MIP
Last year's performance established this fund as one of the best players in its category. It returned 28 per cent, almost twice the category average.
The scheme seeks to generate income by investing in debt, money market instruments and a small portion in equity, around 10-25 per cent.
Since 2005, the fund had been delivering more than the category average, though it hit a bad patch in 2009. The reason for that could be equity allocation. Historically, this fund keeps a higher equity allocation than the category average, at times going beyond the mandated 25 per cent limit, as it did in December 2007 (29.37 per cent). Over the past year, it kept an average equity allocation of 19.44 per cent (category average, 15.13 per cent).
It has always kept a very small equity portfolio in terms of number of stocks, which changed from 2008. It now holds 48 stocks, a progressive increase from 22 in January 2009.
Over the past year, the fund allocated most of its investments in short-term instruments like overnight papers (55.77 per cent) and Certificate of Deposits (15.16 per cent). Hence, its average maturity has hovered mostly below a week, while the category average was 2.88 years. In 2009-end, the fund hiked its average maturity to around a year.
The fund is ranked third in its category on a five-year time frame, with an annualised return of 14 per cent.
DBS CHOLA MIP
For the two years preceding December 2009, the fund had been declaring a dividend every single month.
The primary objective is to generate a monthly income through investments in equity, debt and money market instruments. However, the returns are not assured.
This fund showed disappointing performance for two years, the fund managers took over in 2007 and turned around the fund. In 2008, the fund shone with a return of 7.52 per cent (category average, minus 3.7 per cent). Last year, it underperformed, but, its three- and five-year returns placed it ahead of the category average.
Whenever the fund sees opportunity in equity, the fund manager tanks up on it. Or, flees when the tables turn on this asset class. In May 2009, the fund's equity exposure stood at 19.5 per cent, but did not cross the mandated 20 per cent level. At other times, the equity allocation has been lowered to a miniscule one per cent (November 2008). Overall, its equity tilt is pretty moderate.
This flexibility is also reflected in the churning of the portfolio. The number of stocks can range from two (October 2008) to 21 (June 2008). Though, the number of stocks held have drops, too, and so does the equity allocation. The fund manager actively dabbles in derivatives and when futures are traded at a discount, the futures and options (F&O) route is opted for.
On the debt side, the fund maintains a lower maturity profile and sticks to high-quality paper. It hardly invests in long-dated G-Secs. Currently, 44 per cent of its portfolio is in commercial paper of financial and automobile sectors. Since July 2008, the fund has allocated an average 18 per cent to debentures. The main problem is its expenses, which are on the higher side.
DSPBR SAVINGS MANAGER AGGRESSIVE
Launched in May 2004, the fund's returns have been in line with the category average, with substantial outperformance in 2009. This open-ended income scheme seeks to generate attractive returns, consistent with prudent risk and the portfolio contains quality debt securities and money market instruments substantially for liquidity purposes. Up to 30 per cent of the corpus is invested in stocks of 100 large corporate houses by market capitalisation.
Though the highest equity allocation the fund has touched is 27.54 per cent, there is a tendency to pull down the exposure sharply if market conditions are unfavourable, to less than eight per cent on three occasions in the past.
The fund keeps a pretty tight stock portfolio. Of the 13 stocks (average over the past year), at times, the number of stocks held has increased to 23 and contracted to just three. But, investors need not fret. The mandate ensures the equity portion has a strong large-cap bias and the fund has allocated an average 86 per cent to large-cap stocks, since launch.
On the debt side, this fund invests a major part of its portfolio in floating rate instruments, which minimises the interest rate risk. In the last one year, the exposure to this kind of paper has been around 28.81 per cent of the total portfolio, going up to 47.04 per cent. Other instruments are overnight paper (21.16 per cent) and bonds (22.89 per cent). The fund has refrained from investing in anything below AA+ since September 2009.
With a five-year annualised return of 10.92 per cent, it's a tough choice to ignore.
Source: http://www.business-standard.com/india/storypage.php?autono=389243
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