Aditya Birla Sun Life Mutual Fund

Monthly Fixed Income Update – May 2019

May 25, 2019
4 mins | Views 4318

Consumer Price Index Inflation rose to 2.92% in April 2019, which was broadly in line with market expectations. Food inflation showed a reversal and increased to 1.38% while core inflation eased off to 4.68%

High frequency domestic growth indicators continue to suggest weakness in consumption sector and strength in construction indicators.

Exports rose by healthy 11% year on year, highest in five months, though partially on weak base. However, trade deficit increased marginally is month.

Emerging Markets (Ems) have seen strongForeign Portfolio Investor (FPI) inflows with India alone receiving FPI inflows of ~US$10bn in equities in FY 19-20.

Outlook

Markets are bracing with political uncertainty and awaiting outcome of the elections. There is a possibility that the volatility might subside post the elections, and the markets to pick up from here.

Funds which focus on the shorter end of the curve could possibly offer a better risk-reward mix as they provide both attractive carryand also scope of capital gains from a bull steepening of the 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.Global growth outlook remains benign with International Monetary Fund (IMF) reducing the global growth forecast. Domestic growth and inflation outlook is also benign. These factors remain supportive for bonds.However, crude uptick is a risk.

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 may 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. We aim to add credit structures to our fund whenever appropriate opportunities appear in the credit markets.

All the data mentioned above is as on 30th April, 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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