The Mutual Fund Show: Crisil’s Top-Ranked Debt Funds

This post was originally published on this site

Crisil released rankings of mutual funds for the quarter-ended March across categories. In The Mutual Fund Show this week, the ratings and research firm discussed some of the top performers in banking and PSU debt, dynamic bond, medium duration and low-duration funds.

Banking And PSU

The category saw an inflow of Rs 39,426 crore in the last fiscal with assets jumping 65.5% at Rs 1.20 lakh crore as of March. The growth was driven by inflows into safer credit categories since the pandemic. In the last one year, it has also been among the best-performing debt categories, with one-year returns of 7.53%.

DSP Banking and PSU Debt fund maintained its overall top rank in the category. The big mover, however, is the Sundaram Banking and PSU Debt fund, which climbed the charts in overall ranking, moving up from #5 to #2. Its performance is better than the category average in last three months. In fact, the fund returned 0.73% gains during the quarter, the maximum by any scheme in the category. The fund had the lowest modified duration in its peer group, helping its performance.

Dynamic Bond Fund

The category has the lowest assets under management at Rs 27,552 crore. Its assets rose 52% with net inflows of about Rs 8,000 crore in FY21. The category actively manages duration as there is no regulatory constraint on definition. The modified duration of the funds in the category ranged between 1.59 and 5.37 years in the last three years.

IDFC Dynamic Bond Fund maintained the top rank despite underperforming the category average in the last nine months. It was the top performer in the last three years with 9.23% returns compared to the category average of 7.31%. The fund’s duration was the highest among the peers, averaging 5.37 years during the period.

Rising yields in the quarter ended March impacted its performance. But in the three-year period, given the easing cycle in line with fund’s high duration, it outperformed peers.

Medium Duration Funds

Such funds have duration of three or four years based on regulatory definition and take active credit calls to generate returns. The exposure to sub-AAA securities averaged at 40.79% in the last three years as it declined from a maximum of 54.87 % to 28.10% as of March.

The IDFC Medium Duration Fund, with the same attributes as the dynamic bond fund, maintained it leadership position.

The standout mover, however, was the Axis Strategic Bond Fund, which rose from the third to second rank. It posted 5.92% returns in the last nine months against the category’s average of 4.74% and the highest return of 12.55%.

In the last three years, it returned 7.61% gains compared to the category average of 4.84% and the highest 9.12%. The fund has actively managed duration and it fell to the lowest among peers in the three months ended March as yields hardened.

Low-Duration Funds

This money-market oriented category attracted inflows of Rs 41,554 over the last fiscal, next only to corporate and short duration categories. The category’s exposure to liquid securities averaged 63.20% over the year, with 15.59% in sovereign and cash equivalents.

Two funds climbed to No. 1 position. Canara Robeco Savings Fud ranked 1 on the portfolio parameters including company concentration, asset quality, liquidity and exposure to sensitive sectors. The scheme had 35% sovereign portfolio in the quarter compared to 21.47% in the category.

LIC MF Savings Fund returned the highest among its peers at 1.22% in the last three months against the category average of 0.72%.

It delivered 7% returns compared to category average of 6.15% and maximum fund return of 7.40% during the quarter ended March. The scheme ranked No. 1 on company concentration and exposure to sensitive sectors. It had no exposure to sensitive sectors.

Related Posts