An outperformer

FUND PICK: Chola Liquid Fund

Chola Liquid offers better returns with a lower-than-average expense ratio.

Background: Chola Liquid fund was launched in September 200. The fund does not charge any entry or exit load. The investment objective of the scheme is to generate reasonable returns while maintaining safety and providing liquidity. The strategy is to invest in the highest-rated instruments which are liquid in the secondary market.

Performance and portfolio: The fund is a middle-of-the-road performer. It offers an average return with a lower-than-average expense ratio. The fund's debut was marked by a huge return on its portfolio "� it posted a whopping 10.09 per cent return for the one year ended October 13, 2001.

This was the period when the fund deviated radically from the standard cash fund recipe by investing heavily in corporate debentures of Ranbaxy, Nicholas Piramal, GE Capital, etc.

In addition, the fund has been consistently outperforming the category average with except in 2002 when it fell short of the category average by a marginal difference.

In recent times the fund has moved more into quality certificates of deposits (CDs) and commercial papers (CPs). As on July 31, 2005, it held over 27 per cent of its portfolio in CDs and around 27 per cent into CPs, while keeping approximately 30 per cent of its portfolio in cash as on July 31, 2005. 

Top holdings
As on July 31, 2005	Value (Cr)	Net Assets (%)
ICICI Bank 09/11/2005	54.17	7.74
Rabo India Finance	29.51	4.22
HDFC 24/04/2006	23.98	3.43
Sterlite Industries (India) 07/10/2005	23.00	3.29
UTI Bank 22/08/2005	19.94	2.85
Development Credit Bank 27/09/2005	19.80	2.83
Export-Import Bank Of India 04/05/2006	19.17	2.74
Export-Import Bank Of India 23/05/2006	19.11	2.73
HDFC 10/04/2006	18.26	2.61
Global Trade Finance 21/10/2005	15.00	2.14
National Housing Bank 29/08/2005	14.94	2.14
Citifinancial Consumer Finance 25/04/2006	14.39	2.06
GoI Floating Rate Bond 2006 5.55%	10.00	1.43
IDBI Home Finance 08/08/2005	9.99	1.43
DSP Merrill Lynch 24/08/2005	9.96	1.42
Dabur India 19/09/2005	9.92	1.42
HDFC 19/10/2005	9.88	1.41
UTI Bank 26/10/2005	9.87	1.41
ICICI Bank 01/12/2005	9.82	1.40
ING Vysya Bank 16/02/2006	9.70	1.39

Chola Liquid Fund has a lower-than-average expense ratio (0.30 per cent) and a low minimum initial investment limit of Rs 10,000.

"� Value Research

 

Returns in % as on August 11, 2005

Monthly income plans (MIPs) outdid all other debt categories in the past week. 
 

Equity funds Average category returns (%)
	1 month	1 year
Monthly Income Plans	1.88	11.48
Debt "� short term	0.47	5.69
Debt "� medium term	0.70	5.49
Debt "� Floating rate	0.47	5.20
Gilt "� long term	1.14	4.59
Gilt "� short term	0.43	4.06
Income funds	0.70	3.74

The average category returns for MIPs last week amounted to 1.88 per cent, with long-term gilt schemes coming second with 1.14 per cent. The upsides in equity markets last year also helped MIPs dominate the averages for the past 12-month period, too. 

Leaders Monthly income plans
	1 month	1 year
HDFC MIP "� LTP	2.97	17.20
UTI "� MIS "� Advantage	3.41	16.34
Birla MIP II "� Wealth 25	2.38	14.37
Reliance MIP	3.38	14.24
FT India MIP	1.86	14.06
Kotak Income Plus	2.01	13.96
Deutsche MIP Fund "� Plan A	2.22	13.83
HDFC MIP "� STP	2.03	13.67
PRINCIPAL M I P Plus	2.38	13.47
Sundaram MIP	1.95	13.14

While average MIP returns for the past year amounted to 11.48 per cent, the next best returns were clocked by short-term debt funds at 5.69 per cent. 

Laggards Monthly income plans
	1 month	1 year
ING Vysya MIP "� Plan A	0.42	5.62
Birla MIP II "� Savings	0.80	6.09
DSP ML Savings Plus	0.72	6.40
UTI Monthly Income	1.35	7.74
ING Vysya MIP "� Plan B	1.44	8.34
Chola Monthly Income Plan	0.60	8.54
HSBC MIP "� Regular Plan	1.71	8.75
Deutsche MIP Fund "� Plan B	1.56	8.92
Tata Monthly Income Fund	1.44	9.54
PRINCIPAL M I P	1.60	9.81

HDFC MIP "� Long Term was the best in class among MIPs with an annual return of 17.20 per cent, while ING Vysya MIP "� Plan A came in last with 5.62 per cent.