Fund reviews july 2013

Fund review 22nd July 2013

T I Corporate Bond Opportunities FundT I Corporate Bond Opportunities Fund

Vital Stats◌ःCategory: Income Fund

◌ःBenchmark: Crisil Short-term Bond Index

◌ःStarted: November 2011

◌ःStyle: High credit quality/low interest rate ◌ःStyle: High credit quality/low interest rate

sensitivity.

Assets under management

AUM (Rs-crore)

Templeton India Corporate Bond Opportunities Fund(G) 4,298.12

Maximum-income fund category 16,203.34

Minimum-income fund category 0.83Minimum-income fund category 0.83

Average-income fund category 1,806.58

Median-income fund category 578.88

Fund is 13th-largest within the category

Trailing returns

6.9

7

5.2

4

8.5

2

10.4

0

6.9

3

5.0

8

7.8

0 8.3

6

6.00

8.00

10.00

12.00

Templeton India Corporate Bond Opportunities Fund(G)

-1.3

0

0.2

7

2.8

8

5.2

4

-0.6

7

0.8

4

3.1

3

5.0

8

-0.6

3

-0.5

8

-0.2

5

0.0

4

0.1

6 0.7

2

2.0

4

-2.00

0.00

2.00

4.00

6.00

1 Month 3 Months 6 Months YTD 9 Months 1 Year Since inception

Crisil Short Term Bond Fund Index

Out/under performance

The fund has outperformed its benchmark over longer-term horizons (YTD and higher).

Calendar year return

10.81

9.07

4.00

6.00

8.00

10.00

12.00

2012

1.74

0.00

2.00

4.00


Crisil Short Term Bond Fund Index Out/under performance

In the one complete calendar year for which it has existed, the fund beat its

benchmark by a comfortable margin.

Low-risk fund

0.5

0.6

0.7

0.8

0.4

96904171 0.6

63425153

0.7

09222691


0

0.1

0.2

0.3

0.4

SD Semi SD Beta (Slope)

0.1

30732938

0.1

14171503

0.1

84822356

0.1

48757788

0.1

88607807

0.1

52159951

Opportunities Fund(G)

Average-income fund category

Median-income fund category

Measures of risk calculated over

one-year span

Risk-adjusted return

0.1200

0.1400

0.1600

0.1800

0.2000

0.1

538 0.1

762

0.1

398

0.1

878

0.1

130

0.1

383


0.0000

0.0200

0.0400

0.0600

0.0800

0.1000

Treynor Sharpe Sortino

0.0

405

0.0

459

0.0

297



Risk-adjusted return

measures calculated

over one-year span

Marginally lower/higher than average; higher than median

A low-duration fund

4

5

62.7

4

5.1

4

3.4

6

Templeton India Corporate Bond

0

1

2

3

Average Maturity (Yrs) Mod Duration (Yrs)

2.7

4

2.4

7



Fund does not take duration risk.

Credit risk

Rating Fund allocation (%)Category allocation-income funds (%)

AAA 0.02 30.64

AAA(SO) 0.07 1.71

AA+ 11.71 7.70

AA+(SO) 7.08 0.80

AA 7.66 3.18

AA(SO) 2.17 0.07

AA- 19.96 3.66AA- 19.96 3.66

AA-(SO) 0.67 0.06

A1+ 17.61 9.81

A+ 6.83 0.53

BWR A+(SO) 2.89 0.24

A 16.02 1.35

A(SO) 4.47 0.58

A-(SO) 0.53 0.02

Cash & Equivalent 2.30 11.20

Does invest in sub-AAA bonds in search of yield.

Expense ratio on the higher side

1.40

1.60

1.80

2.00 1.82

1.46

1.67

Expense ratio (%)

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40




Expense ratio (%)

Fund manager

◌ःUmesh Sharma and Sachin Padwal Desai

have been managing this fund since

November 2011.

◌ःThe fund has done well under their watch.◌ःThe fund has done well under their watch.

Bottomline

◌ःThe fund does not have a long track record.

◌ःNot a low-cost fund.

◌ःHas performed well during the limited period ofits existence.

◌ःThe fund does not take duration risk. May◌ःThe fund does not take duration risk. Mayunderperform peers with higher duration in adeclining rate environment.

◌ःIt does invest in sub-AAA bonds but tries tomitigate risk through intensive research intothe companies whose bonds it invests in.

Birla Sun Life Medium Term Plan

Vital Stats

◌ःCategory: Income fund

◌ःStarted in March 2009

◌ःStyle: high credit quality and low interest-

rate sensitivityrate sensitivity

Assets under management

AUM (Rs-crore)

Birla SL Medium Term Fund(G) 825.96

Maximum-income fund category 16,203.3

4

Minimum-income fund category 0.83

Average-income fund category 1,806.58

Median-income fund category 578.88

It is the 36th-largest fund within the income fund category

Trailing returns

5.0

5

7.3

7

5.6

7

10.6

1

9.7

1

5.8

7

4.2

0

8.8

2

8.2

7

6.00

8.00

10.00

12.00

Birla SL Medium Term Fund(G)

-0.7

3

2.1

4

-1.6

9

0.3

9

2.7

9

-4.00

-2.00

0.00

2.00

4.00

1 Month 3 Months 6 Months 9 Months YTD 1 Year 3 Years


Category average-income funds

The fund has beaten the category average over most investment horizons

(except 1-month).

Calendar year returns

10.99

9.31

5.90

9.90

8.24

8.00

10.00

12.00

5.90

4.74

0.00

2.00

4.00

6.00

2012 2011 2010


Category average-income funds category

The fund has beaten the category average in all three years of its existence.

Low-risk fund

0.5000

0.6000

0.7000

0.8000

0.3

786

0.6

690

0.7

109


0.0000

0.1000

0.2000

0.3000

0.4000

SD Semi SD Beta (Slope)

0.0

911

0.0

600

0.3

786

0.1

355

0.1

026

0.1

285

0.1

004



Category median-income funds

Risk

parameters

calculated over

three years.

High risk-adjusted returns

0.2500

0.3000

0.3500

0.4000

0.4500

0.2

680

0.4

068

0.1

941

0.0000

0.0500

0.1000

0.1500

0.2000

0.2500

Treynor Sharpe Sortino

0.0

645

0.0

284

0.1

538 0.1

941



Parameters

for risk-

adjusted

returns

calculated

Fund does not take duration risk

2.5

3

3.5

3.42 3.44

Mod Duration (Yrs)

0

0.5

1

1.5

2

2.5




1.64

Mod Duration (Yrs)

Credit risk

Rating Fund (%) Category (%)

AAA 12.25 30.64

AA+ 8.91 7.70

AA+(SO) 8.22 0.80

AA- 4.43 3.66

BWR A+(SO) 0.45 0.24

A1+ 8.73 9.81A1+ 8.73 9.81

A1(SO) 7.64 0.24

A 17.89 1.35

A(SO) 4.96 0.58

BWR A-(SO) 18.91 0.36

Cash & Equivalent 7.61 11.20

The fund does go down the ladder of credit risk in search of higher yields.

Low expense ratio

1.20

1.40

1.60

1.80

1.371.46

1.67

Expense Ratio (%)

0.00

0.20

0.40

0.60

0.80

1.00

1.20




Expense Ratio (%)

Note: all

references to

income fund

category refer to

Value Research’s

categorisation.

Fund manager

◌ःThe fund is now managed by Rohit Murarka

who assumed charged recently in January

2013.

◌ःHe was part of the research team when the◌ःHe was part of the research team when the

fund was earlier managed by Maneesh Dangi

(who has since become the Co-CIO).

Bottomline

◌ःThe fund tries to earn returns by identifying

credit opportunities in medium-term

securities.

◌ःThe fund manager focuses on bottom-up◌ःThe fund manager focuses on bottom-up

selection of bonds.

◌ःThose with a two-three year investment

horizon may invest in this fund.

Bottomline

◌ःOf the two funds, we like Birla SL Medium TermPlan better because of its longer trackrecord, consistent performance, and lowerexpense ratio.

◌ःAfter the recent debacle in the debt market◌ःAfter the recent debacle in the debt market(yields spiked suddenly on 16 July after RBItightened liquidity, causing losses in durationfunds), investors should consider holding a mixof both duration and accrual funds in theirportfolios.

Fund reviews july 2013

Economy & Finance

Transcript of Fund reviews july 2013