GEMGAZE

December 2016 

Average investors need a balanced investment portfolio in order to earn reasonable returns at an acceptable level of risk. This is achieved by investing money in debt funds besides diversified equity funds.

All the GEMs from the 2015 GEMGAZE but two have exhibited a dismal performance and have been shown the exit door in the 2016 GEMGAZE. Birla Sun Life Dynamic Bond Fund and Birla Sun Life Floating Rate Short-term Fund have retained their esteemed status as GEM.

Birla Sun Life Treasury Optimizer Fund Gem

Birla Sun Life Treasury Optimizer Fund was launched nearly a decade ago in 2008. The current AUM of the fund is Rs. 9,048 crore. Its return in the past one year is 12.97%, almost on par with the category average of 12.35%. The number of holdings in the fund’s portfolio is 130 with an average yield to maturity at 7.56%. The expense ratio of the fund is fairly low at 0.65%. The fund is benchmarked against the CRISIL Short-term Bond Index. The fund is managed by Mr. Kastubh Gupta since September 2009.

Birla Sunlife Dynamic Bond Fund Gem

Birla Sunlife Dynamic Bond Fund manages assets worth Rs. 15,568 crore, making it the largest fund in the income category. This fund is a steady top quartile performer with low volatility. It has delivered returns across interest-rate cycles and is among the top few in its category. The one-year return of the fund is 16.02% as against the category average of 14.15%. A veteran in the dynamic-bond-fund category, this ten-year-old fund has the distinction of beating both its benchmark and the category consistently over three interest-rate cycles. The fund does not rely on duration calls alone for alpha and uses a mix of G-secs and corporate bonds to take advantage of rate movements. The fund's track record shows that it has beaten its benchmark and category by a convincing 1.40 percentage points annually over 10 years and by over 1 percentage point in five and seven years. Returns in the last one year have been slightly below the benchmark, given a more conservative portfolio positioning. But it has managed this with good risk control, given that its worst one-year returns, at 3.3%, have not slumped into the negative territory like some of its peers. In recent months, the fund has stretched its maturity with the view that further transmission of recent rate cuts will bolster bond prices. Though the fund has taken credit calls in the past, it has reduced exposure to lower-rated corporate debt in the last one year. In May 2015, the fund had a 59% exposure to G-secs and 15% to AAA corporate bonds, with a 20% plus exposure to bonds that were AA-rated and below. But by March 2016, G-sec and AAA exposures had been pegged up to over 86% of assets and AA exposures trimmed to just 6%. The number of holdings in the fund’s portfolio is 55 with an average yield to maturity at 8.15%. The expense ratio is 1.5%. The fund has 58 holdings with the yield to maturity of 7.8%. The fund is benchmarked against the CRISIL Short-term Bond Index.  Maneesh Dangi is the fund manager since September 2007.

SBI Magnum Gilt Fund - Long term Plan Gem 

Launched in December 2000, the fund has an AUM of Rs 2,205 crore. The one-year return of the fund is 16.93% as against the category average of 16.50%. The fund has outperformed its benchmark over one-, three- and five-year timeframes. It has delivered a compounded annual return of 11.5% over the last three years. The fund is benchmarked against the I-Sec Li-Bex. The fund has seven holdings with the yield to maturity of 7.02%. The expense ratio of the fund is 0.97%. Dinesh Ahuja has been the fund manager since January 2011.

Birla Sunlife Floating Rate Short term Fund Gem

This relatively young fund, launched in October 2005, boasts of a massive AUM of Rs 4950 crore.  In the past one year, this liquid fund has returned 7.82% as against the category average of 7.58%. The number of holdings in the fund’s portfolio is 42 with an average yield to maturity at 7.04%. The expense ratio is a mere 0.27%. The fund is benchmarked against the CRISIL Liquid Index. Sunaina da Cunha and Kaustubh Gupta are the fund managers.