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Given the turbulence in the bond market and the resultant losses suffered by a few debt funds over the past month, selecting relatively risk-free schemes becomes very important for conservative investors.
In this regard, Aditya Birla Sun Life Money Manager (ABSL Money) is a quality debt scheme that ensures above-average returns by taking very minimal risks.
The scheme is classified as a money-market fund and as such invests in safe instruments that carry the highest credit ratings.
Over one-, three- and five-year time-frames, the fund has consistently outperformed its benchmark — CRISIL Liquid Index.
On a daily rolling return basis over the past nine years, ABSL Money has outperformed its benchmark majority (72 per cent) of the times.
The scheme continues to be in the top quartile in its category, and its returns over the long term are better than even those recorded by many dynamic-bond, credit-risk and long-duration funds.
Given that there is a likelihood of interest rates rising steadily, it will be appropriate for investors to bet on bond funds with low or ultra-short durations.
The fund’s five-year annual return of over 8 per cent is among the best in its category.
Strategy
ABSL Money will be suitable for a variety of investors — for those looking to park their emergency funds, for those wanting a safe avenue to accumulate for medium-term goals of around three years, and for those wishing to park sums that will eventually be moved to equity schemes (via systematic transfer plans - STPs).
The fund invests in commercial papers and certificates of deposits (CDs) of banks, non-banking financial companies and corporates. ABSL Money also invests in sovereign treasury bills (T-Bills).
Reverse repo is another key investment avenue of the scheme.
Earlier, the fund used to go down the ratings curve and invest in securities that were rated AA- and AA+, though the proportion was still small in the overall portfolio. Over the last year or so, ABSL Money has invested only in instruments that carry the highest ratings for short-term instruments, A+, and sovereign T-Bills.
The modified duration is currently being kept low at around 0.2 years and has hovered at 0.1-0.2 years most of the time.
Portfolio
Commercial papers of Reliance Industries, L&T Finance, HDFC, Adani Enterprises and M&M Financial Services are some of the key holdings of the fund. These apart, fixed deposits and CDs of IndusInd Bank, ICICI Bank, Axis Bank and YES Bank alos figure prominently in the portfolio.
For investors with a modest risk appetite, Aditya Birla Sun Life Money Manager will be a solid option to generate healthy returns over the short and medium terms.
You can consider lump-sum investments in such money-market funds — rather than through the SIP route — when there is a surplus.
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