udential ICICI Income Plan
| Background: Launched in June 1998, Prudential ICICI Income Plan seeks to generate regular returns by investing in quality debt instruments. |
| Entry into the fund requires a minimum investment of Rs 5,000. Investments up to Rs 10 lakh, which are redeemed within six months, attract a 0.5 per cent CDSC. |
| Performance: After an uninspiring show in 2002, the fund proved its mettle in 2003 (up 8.18 per cent) by navigating the year's rocky markets with ease. In the volatile first quarter of 2003, it just lost 0.03 per cent compared with its category's loss of 0.10 per cent. |
| Then, in the subsequent two quarters, its returns were more promising - 3.88 per cent and 3.43 per cent respectively - which were nearly half a per cent higher than the category average. |
| The fund has largely benefited in the mid-year rally by maintaining a high average maturity of 6.83-7.16 years (between May and October). |
| Following increasing volatility in last two months of 2003, it reduced its portfolio maturity to 6.31 years in December, displaying the fund manager's astute portfolio management skills. Overall, it has ended 2003 among the top-half funds in the category. |
| Portfolio: With 70-80 per cent of its assets invested in AAA corporate bonds and gilts, the watchword for the fund is quality. Initially, as the fund used to take small interest rate bets, corporate bonds dominated its portfolio. |
| But, with declining spreads and the urgency to raise portfolio maturity, gilts now account for half of the portfolio. Exposure to bonds with below-AAA ratings has been capped to an average 7 per cent of the portfolio through 2003. |
| Though it had maintained a higher average maturity in 2003, historically the fund had a reputation for being a bit more defensive than the average bond fund. |
| Even when interest rates were declining in 2001, the fund |
