PineBridge India Short Term Fund

Invest In Tax Saving Mutual Funds Online

Download Tax Saving Mutual Fund Application Forms

Buy Gold Mutual Funds

Call 0 94 8300 8300 (India)

 

Investors with limited risk appetite and looking for opportunities in the debt product spectrum can consider investing in PineBridge India Short Term Fund. This fund has adeptly shuffled its portfolio to deliver 9.9 per cent in the last one year, higher than benchmark Crisil Short-Term Bond index' return of 8.8 per cent.

Its three-year return of 8.6 per cent annually is also superior to the benchmark's return of 7.4 per cent and category average of 8.1 per cent. While this is a short-term fund, that it has maintained a superior record for a longer period of three years, is an indication of well-timed moves, both in rising and falling interest rate scenarios.

Suitability

PineBridge India Short Term fund is suitable for investors with a time frame of 15-18 months and willing to take higher risks than liquid or ultra short-term funds. Consider investing lump sum in the fund now, if you have a goal at least 1.5 years away.

Among other short-term funds, a few such as Templeton India Short Term Income Plan and JP Morgan Short Term Income have delivered superior returns in the past and may do so again given their higher portfolio maturity.

But such higher average portfolio maturity and elevated exposure to bonds/debentures entails assuming higher risks.

While the said funds also remain investment worthy, our choice of PineBridge India Short Term Fund stems from the fund's high exposure to less risky and more liquid certificates of deposits (CDs) from banks. That CDs may see a rally over the next month or two (read on to know how), enhances the fund's chances of delivering well.

Added to this, PineBridge India Short Term is perhaps one of the few short-term funds that do not have an exit load. Simply put, you can exit any time, like you would with a liquid fund. That said, it would nevertheless be safer to stick to the time period mentioned by us, to reduce any impact of volatility and also enhance your returns.
Like all other debt funds, the fund would be taxed at your income tax slab for short-term capital gains of less than a year and at 10 per cent without indexation (20 per cent with indexation) for holdings of over a year.

Opportunity in the short end
Typically, when interest rates peak, most debt market institutional investors prefer to take exposure to long-end gilt funds, which will gain from a price rally, when rates fall. But we believe this may be a good time to play the short-end of the curve for the following reason: RBI data suggests that the liquidity pressure in the banking system remains; both Central and state government borrowing in the month of February only adds to the pressure.

Liquidity requirement is also set to be higher in the Month of March on account of advance tax payment by companies. Banks too, have been drawing down their liquidity as deposit growth has been lower than credit growth thus far this fiscal.

All this is likely to add to the pressure on short-term liquidity. That means run-up in the yield of short-term instruments such as CDs. More importantly, Indian banking system has been traditionally short of liquidity in the run up to March and the condition slowly eases post April. Such a trend is obvious when one looks at the bank CD rates from January – April of every year in the past few years. The rates typically start rising post January and ease post April. Tightening rates are already visible now with 12-month CD rates rising to 9.35 per cent (mid-February) from 8.8 per cent a month ago.

The data suggests that CD rates ease around April, thus providing some capital gains as rate declines trigger a price rally. Rate cuts, if any, in April, can also be expected to accentuate such a decline. But what if liquidity remains stiff and rates hold? Even then, the less than one-year bank CD holdings of PineBridge India Short Term are likely to ensure good accrual income (interest income from the CDs) if the fund simply holds them to maturity.

Portfolio and performance

The fund held 66 per cent of its assets in bank CDs as of January, higher than top short-term funds from the Templeton and JP Morgan stable. Its average portfolio maturity (including bonds and commercial paper) was 1.62 years, as against the 2-plus years for a good number of peers. A lower portfolio maturity not only reduces risk but helps participate in gains arising from liquidity easing.

The fund holds only P1+ and AAA-rated instruments – these ratings being the top in each category.

PineBridge India Short Term Fund beat its benchmark 94 per of the times on a rolling one-year return basis for the past three years. The fund was launched in March 2008 and is managed by Mr Vikrant Mehta.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

1. ICICI Prudential Tax Plan Invest Online
2. HDFC TaxSaver Invest Online
3. DSP BlackRock Tax Saver Fund Invest Online
4. Reliance Tax Saver (ELSS) Fund Invest Online
5. Birla Sun Life Tax Relief '96 Invest Online
6. IDFC Tax Advantage (ELSS) Fund Invest Online
7. SBI Magnum Tax Gain Scheme 1993 Invest Online
8. Sundaram Tax Saver Invest Online
9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

1. Largecap Funds Invest Online
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Birla Sun Life Front Line Equity Fund
2. Large and Midcap Funds Invest Online

1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
3. UTI Dividend Yield Fund
2. Mid and SmallCap Funds Invest Online

1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
3. Small and MicroCap Funds Invest Online

1. DSP BlackRock MicroCap Fund
4. Sector Funds Invest Online

1. Reliance Banking Fund
2. Reliance Banking Fund
5. Tax Saver MutualFunds Invest Online
1. ICICI Prudential Tax Plan
2. HDFC Taxsaver
3. DSP BlackRock Tax Saver Fund
4. Reliance Tax Saver (ELSS) Fund
6. Gold Mutual Funds Invest Online

1. Relaince Gold Savings Fund
2. ICICI Prudential Regular Gold Savings Fund
3. HDFC Gold Fund