INTERESTING INVESTMENT OPPOURTUNITY WITH 1 YEAR VIEW–RELIANCE REGULAR SAVINGS FUND-DEBT OPTION
An investment option from the stables of Reliance Mutual fund is worth looking at with an investment horizon of 1 year plus. This can actually be treated as a quasi FMP with main focus of investing the funds papers of those manufacturing companies( who used to enjoy good rating a few years back and have been down graded) , NBFCs & also in Pass Through Certificates ( PTCs) with higher carry yield.
All these combined with a stiff exit load of 2%( if an investor exits within one year of investment will) a) give stability to the portfolio b) due to investments in NBFCs/AA rated papers & PTCs will give higher carry yield & c) with investors also drawing down on the maturity alongwith the portfolio due to exit load for one year will give a certainty of locked in returns less expense ratio.
Other Scheme Attributes: ( as on July 31’2009)
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Current Corpus
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Rs.152.35 Crs
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Institutional Plan
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Min Investment: Rs.25 lacs
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Entry Load
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Nil
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Exit Load
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2% if redeemed/switched out on or before completion of 1 year
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Weighted Average YTM
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8.12%
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Modified Duration
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1.25 years
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Wghtd Avg Maturity
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1.41 years
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Break up of the Portfolio as on July 31’2009:
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Asset Allocation as on 31/07/2009 |
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| FINANCE |
67.56% |
| Finance – Asset Backed |
18.88% |
| Financial Institutions |
7.03% |
| DIVERSIFIED |
4.60% |
| Cash & Other Receivables |
1.93% |
| Grand Total |
100.00% |
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Maturity Profile |
|
| Holdings |
Weightage(%) |
| Between 1 – 2 Years |
68.45% |
| Below 1 Year |
25.02% |
| Between 2 – 4 Years |
4.60% |
| Cash & Other Receivables |
1.93% |
| Grand Total |
100.00% |
| Rating Profile | |
| Holdings | Weightage(%) |
| AAA | 19.28% |
| LAAA | 5.58% |
| AAA(SO) | 10.34% |
| AAA(IND)(SO) | 8.54% |
| AA+ | 18.35% |
| LAA+ | 13.48% |
| LAA | 22.50% |
| Cash & Other Receivables | 1.93% |
| Grand Total | 100.00% |
Holdings of the Scheme as on July 31’2009:
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Portfolio of Reliance Regular Savings Fund-Debt Option |
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as on 31/07/2009 |
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| Holdings |
Rating |
Instrument |
Weightage |
| NON CONVERTIBLE DEBENTURES. | |||
| BAJAJ AUTO FINANCE LTD. | AA+ | NCD |
11.29 |
| L & T INFRASTRUCTURE FINANCE CO LTD | LAA by ICRA | NCD |
11.25 |
| KOTAK MAHINDRA PRIME LTD. | LAA by ICRA | NCD |
11.25 |
| TATA CAPITAL LIMITED | LAA+ by ICRA | NCD |
11.17 |
| LIC HOUSING FINANCE LTD. | AAA | NCD |
7.65 |
| CITIFINANCIAL CONSUMER FINANCE INDIA LIMITED* | AA+ | NCD |
7.06 |
| NATIONAL BANK FOR AGRI. & RURAL DEV | AAA | NCD |
7.03 |
| ICICI HOME FINANCE CO. LTD. | LAAA by ICRA | NCD |
5.58 |
| ADITYA BIRLA NUVO LTD. | CAREAAA by CARE | NCD |
4.60 |
| SUNDARAM FINANCE LIMITED | LAA+ by ICRA | NCD |
2.31 |
| Sub Total of NON CONVERTIBLE DEBENTURES. |
79.19 |
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| PASS THROUGH CERTIFICATES | |||
| INVT VEHICLE FOR STRUCTURE TR 1108 | AAA(SO) | PTC |
10.34 |
| INDIAN INFRA EQUP REC TRUST JULY 09 | AAA(IND)(SO) by FITCH | PTC |
8.54 |
| Sub Total of PASS THROUGH CERTIFICATES |
18.88 |
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| CASH AND OTHER RECEIVABLES |
1.93 |
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| GRAND TOTAL |
100.00 |
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| *Guarunteed by Citigroup Inc | |||
I would recommend investors to look to invest in the said scheme with one year plus investment horizon. Also, the Fund House is likely to stop accepting funds ( or will stop marketing the said scheme) post August 31’2009 once they reach a critical mass. This will ensure that frequent entries at a later date will not dilute returns of existing investors who would have invested by that date. Hence, besides the high accruals there might be a possibility of capital appreciation ( as & when short end of the curve between 1-2 year segment starts to cool off). One can ( based on current portfolio & likely investments till August 31’2009) expect a return of between 7.50% to 8.00% p.a. (post expenses) over one year horizon.
Comments
The bond market is worried. But what it is worried about is a mystery to me.
The worry shows in the volumes where even the benchmark ten-year paper traded very thin volumes. The low volumes are feeding into nervous auction bids and cut-offs are coming in higher in yield terms.
Your views on this Sir !
Is this the right time to enter in long term Income/GSec funds ?
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