Aditya Birla Sun Life Mutual Fund

Monthly Fixed Income Update - October 2018

Oct 30, 2018
5 mins | Views 598
  • India's inflation based on wholesale prices rose by 5.13% year-on-year in September 2018, after a 4.53% gain in August 2018.
  • Growth of India's eight infrastructure sectors slowed down to 4.2% in August against 4.4% in the year-ago month on account of decline in production of crude oil and fertilizer.
  • RBI in its monetary policy meeting kept the key interest rates unchanged while changing the stance to withdrawal of accommodation. The government hiked interest rate on small saving schemes by 30-40 basis points (bps).

Outlook
  • Considering the RBI’s stance, global macros, Oil price movement and domestic pain in NBFCs and HFCs we would adopt a more cautious bias in our portfolios.
  • We advise the investors to take incremental exposure in low duration/low risk products. The investors should also continue to hold their investments in accrual funds as they are good investment propositions from long term perspective.

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):

    Global cues (Crude, Trade Tension & Currency) continued to drive long term rate expectations. However, regular open market operations (OMOs) by RBI has given a positive twist to the rates market. We like 2-3yr segment in the corporate bonds. The issuance in the corporate bonds, which has been on the lower side, would provide a window to add in the short end in the right environment.
  • 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. 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. We have been careful in adding adequate security layers, in the form of collaterals and covenants, while underwriting trades.
  • 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. We have been careful in adding adequate security layers, in the form of collaterals and covenants, while underwriting trades. Presently, given the current circumstances, we have become a bit cautious and have increased G-sec allocation in the portfolio.

All above mentioned data is as on 30th September 2018

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.
 
All the data mentioned above is as on 30th September, 2018
 
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