Excelsior Correspondent
JAMMU, July 16: ICICI Prudential, All Seasons Bond Fund has a consistent track-record of over 10 years. The scheme increases duration when interest rate is expected to fall to benefit from capital appreciation and vice versa. The duration calls taken is based on an in-house model which takes into account several macro factors. This helps the fund to stay ahead when it comes to taking duration calls.
The scheme invests between corporate bonds and G-Secs. So, when interest rates are high, the scheme will behave like a long duration scheme and when interest rates are low, the scheme will behave like an accrual scheme.
Since its inception in May 2009, the fund has actively managed duration in various interest rate scenarios and delivered NAV growth in these conditions. For example, from November 2017 to January 2018, the fund cut duration to minimize the effect of rising interest rates and from February 2018 to March 2018, the fund increased duration once the yields peaked out.
A handout stated that currently, the scheme has increased its modified duration to 5.97 years as on May 31, 2020 from 5.91 as on April 30, 2020. Around 52.35% of the portfolio is invested into G-Sec while around 42.42% is made up of well researched corporate securities. The liquidity of the portfolio can be gauged from the fact that the scheme is maintaining 67.88% of the portfolio in AAA and equivalent, cash, and government securities.
Owing to such timely manoeuvring, investors benefited from capital appreciation. In the last one-year, in terms of fund performance, when category average return is 9.5%, ICICI Prudential All Seasons Bond has delivered 12.3%. The out-performance story can be seen across various timeframes – 2, 3 and 5 year periods.
Such consistent outperformance has been possible due to the value investing oriented approach to dynamically manage portfolio duration. A balanced mix of high yielding instruments for better accrual and high rated instruments for capital appreciation and better liquidity helps deliver a wholesome investment experience to its investors.
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