Aditya Birla Sun Life AMC Limited

Monthly Fixed Income Update - February 2019

Mar 03, 2019
4 mins | Views 4925
  • Consumer Price Index (CPI) inflation came down to its lowest point in December to 2.19% led by low food inflation however miscellaneous inflation increased to 6.45% due to increase in health, household goods, and education.
  • February started with the budget announcement. It has been a holistic one addressing the needs of people at large, leaving more money in the hands of a common man, farmers and salaried people.
  • The Reserve Bank of India (RBI) monetary policy committee delivered a slightly surprising 25bp repo rate cut, along with change in stance from calibrated tightening to neutral.
  • INR remained broadly range bound with minor depreciating bias. RBI appears to have started accumulating reserves and that may be the reason for capping up of INR upside.

  • We have been looking to incorporate the dovish shift in monetary policy approach by this regime in our portfolio positioning. Further rate cuts will result in a steeper curve.

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 fund has a good quality accrual portfolio. RBI cut the policy rates by 25 bps and sounded dovish. Rates, especially the short end, have rallied as a result. While benign global macro and low crude continue to be supportive of bonds yields but populist measures in the budget and the resultant fiscal slippage would put supply pressure on the long end.
  • Aditya Birla Sun Life Credit Risk Fund (formerly known as Aditya Birla Sun Life Corporate Bond Fund) (An open ended debt scheme predominantly investing in AA and below rated corporate bonds):

    The fund has a diversified accrual portfolio with adequate liquidity. We have been careful in adding adequate security layers, in the form of collaterals and covenants, while underwriting trades. Long term investors should continue to invest in the fund.
  • 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 past, several interesting opportunities have presented themselves in the credit markets and we have benefited by adding some credit structures in our funds.

All the data mentioned above is as on 31st January, 2019
Aditya Birla Sun Life AMC Ltd /Aditya Birla Sun Life Mutual Fund is not guaranteeing/offering/communicating any indicative yield/returns on investments
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
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