Aditya Birla Capital
ABC Home
Loans
Investments
Insurance
Payments
Download ABCD

Experience finance made simple on the new ABCD app!

Scan to Download the App

Playstore Appstore
1800-270-7000

Aditya Birla Sun Life AMC Limited

Aditya Birla Sun Life AMC Limited

    Our Menu
    Invest with Us
    Metaverse

    Aditya Birla Sun Life AMC Limited

    Monthly Fixed Income Update (India) - April 2018 - ABSLMF Blog

    Add to Wishlist

    Monthly Fixed Income Update April 2018

    Jun 05, 2018
    5 mins | Views 96
    Zoom Image
    • The government has forecasted for FY18 gross domestic product(GDP) growth at 6.6%, up from 6.5% earlier and compared with 7.1% in the year-ago period.India’s eight core industries grew 6.7% in January 2018 against 4.2% in December and 3.4% in January 2017.
    • There are early signals of growth recovery in Indian economy and we expect growth to move towards 7% levels lead by both base affect and economy gaining momentum incrementally.
    • The government will introduce a new bucket of bonds with duration of one to four years, indicating its willingness to borrow more via short-term securities.Bond yields dropped 25 bps, the same day, with benchmark 10 year Government of India (GOI) quoting ~7.37% yield.
    • Retail Inflation last month came at 4.40% (lower than expectations) owing to fall in food inflation (mainly vegetable prices).

    Outlook

    • An uptick in inflation in 2018 to an average of 4.5% to 5% from low levels of 2017 is expected. Higher inflation expectation is based on prospects of higher fiscal deficit, election related spending, and government’s likely aim to boost rural income levels
    • Given this expectation and prospects of a gradual growth recovery, it is expected from the RBI to remain on a prolonged pause.Possibility of rate hike exists if the upside risks materialize for both in inflation and growth, particularly if there is a major fiscal slippage and/or sharp rally in commodity prices.

    Source: Bloomberg, ABSL AMC Internal Research

    Portfolio Action

    • Aditya Birla Sun Life Short Term Opportunities Fund (An open ended short term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 1-3 years):

      The liquidity scenario panned out as anticipated and the yields at the shorter end have gone up.Given the negative surprises on growth over the past 3 quarters and the increasing concern around growth recovery in the monetary policy committee, we think a prolonged pause on rates is the base case. We assign very low possibility to rate hikes in the near future. At these levels government bonds are also quite cheap. Hence, the fund has built exposure in government bond opportunistically to benefit from current low prices.
    • Aditya Birla Sun Life Corporate Bond Fund (An open ended debt scheme predominantly investing in AA and below rated corporate bonds):

      AAA spreads over G Sec are low and hence, expensive. Hence, we have been gradually reducing our exposure to AAA rated bonds. We continue to build exposure towards high yield papers (below AA rated) which can offer good risk reward proposition. Such papers offer opportunities to build customized structure. We intend to keep adding credit structures with adequate covenants to mitigate risk.
    • Aditya Birla Sun Life Medium Term Plan (An open ended medium term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 3-4 years):

      We have been managing this fund with the dual objective of building a good quality accrual portfolio along with managing the duration actively.In the last few months, several interesting opportunities have presented themselves in the credit markets and we have benefited by adding some credit structures in our funds.Regulators are also taking active interest in developing various facets of corporate bond markets like liquidity, new class of issuances etc. which will result in healthy activity in the credit market.
     
    Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
     
    Add to Wishlist
    Rate this
    Rate this Article
    Leave a comment
    Comment required
    Name Required
    Email ID required
    SUBMIT COMMENT
    Load More
    Similar Articles
    loading...

    blog_OurExpertOur Experts

    ToolAndCalculatorTools and Calculator

    eAssistance

    Give us a call on

    1800 270 7000 within India

    Get a call back

    RSSRSS News Feed

    blog_archives.pngArchives

    Please Select Month
    Please Select Year
    Close
    Hover to Zoom