The Birla Sun Life Medium Term Plan has emerged as the winner in the debt (bond) category despite managing assets that are a tenth of that of its closest competitor, SBI Dynamic Bond Fund. The fund aims to maximise returns by identifying mispriced credit opportunities in mediumterm securities and selectively investing in them. "This means the fund seeks opportunities that offer a higher yield where the investment is fairly priced for the amount of risk taken," says Maneesh Dangi, Co-Chief Investment Officer at Birla Sun Life Mutual Fund.
The fund follows a bottom-up investment strategy. This means it focuses on selecting fixed-income securities based on the individual attributes of a company instead of focusing on sectors or broad macro conditions.
The fund looks for securities that yield three to four per cent more than the AAA-rated paper and government bonds. It invests in non-AAA securities only after strict due diligence of every company and identifying the risk-reward for each investment.
One of the investments
that has played out well is RHC Holding, which is secured by shares of Religare Enterprises and Fortis Healthcare offering a yield of about 14 per cent as collateral. Similarly, the fund invested in two-year non-convertible debentures of Prime Publishing, part of the Zee Group, with shares owned by promoters in various listed companies pledged as collateral.
The fund does not take positions on the maturity of the paper depending on interest rates. It invests in one- to three-year corporate bonds and recommends an investment horizon of two to three years while investing in this fund.