JM Income Fund's portfolio maturity tends to be on the higher side making it more volatile than an average income fund
Background: JM Income Fund is the oldest open-end bond fund in the country. Entry into the fund requires a minimum investment of Rs 1,000.
While the fund does not levy an entry or exit load it charges a contingent deferred sales charge of 0.4 per cent for investments upto Rs 5 lakh which are redeemed within 90 days of investment.
Performance: If you want to play a high-risk high-return game within your debt portfolio, JM Income Fund should be one of your picks.
Aggressive duration management and active trading in government securities has been the way of life for this fund.
Though this makes it a relatively volatile offering compared to its peer group, the top-quartile returns in the past four calendar years are more than enough to cheer about. Its five-year returns of 13.97 per cent are a reflection of this strong performance.
Portfolio: This oldest bond fund has gone through both good as well as bad times. But as the fund's average maturity has always been on the higher side in the category, it's been highly sensitive to interest rate changes.
Although the fund lost more than its peers in the volatile first quarter of 2003, this has proved rewarding in the subsequent bullish markets.
High portfolio maturity has been the main reason for the fund's good performance in 2001 and 2002, which saw four bank rate cuts.
The fund's aggressive approach can also be seen from the fact that in the past four months, it has maintained an average maturity of over 8 years
