When your investors are investing for a financial goal that is 2-3 years away, they ideally look for an investment vehicle that provides them superior returns than traditional investments like FD without taking too much risk.
Short duration funds are a suitable choice to fulfill such a financial requirement. They focus on enhancing the portfolio returns by identifying and selectively investing in mispriced credit opportunities in the market while taking minimum risk.
If you are looking to zero-in on a short duration fund, you can opt for Aditya Birla Sun Life Short Term Fund. The current scenario also puts ABSL Short Term Fund in a sweet spot. Given the effort of policymakers to boost consumption and investment, RBI's accommodative stance, liquidity surplus and expected lower inflation will keep the real interest rate lower. In this backdrop, locking the current yield levels with an investment avenue like ABSL Short Term Fund seems a sensible option, as the fund tactically captures the spread opportunities across various curves such as government securities and AAA bonds, PSU and AAA bonds and so on.
Most importantly, the fund tries to maintain that around 85% of the portfolio is invested in safe instruments like sovereign bonds, AAA bonds and cash. This minimizes the duration, credit and liquidity risk. Additionally, the fund ensures that its holdings remain well diversified.
Since its inception in 2003, this fund has consistently given handsome returns with minimum risk. Value Research website shows that the fund has not only outperformed its benchmark in 1-year, 3-year, 5-year, 7-year and 10-year time, it has done better than most funds in this category as well. In fact, the fund has delivered close to double-digit returns in the last one year even as the fixed income market went through one of its toughest phases.
