Stable performance

FUND PICK: Deutsche Short Maturity

Background: Deutsche Short Maturity was launched in January 2003. The fund does not charge any entry or exit load. The minimum investment is Rs 25,000. There is no minimum requirement for subsequent investments.

Performance: The fund aims to generate steady returns with low volatility by investing in short- and medium-term debt- and money-market securities. It does not mind taking slightly higher risk to deliver above-average returns.

A relatively new fund in its category, it has done well in terms of delivering stable returns. It has outperformed the category in 14 of the 20 months of its existence. Its expense ratio of 0.9 per cent is in the same range as that of its peers.

Portfolio: In the past six months, the fund's allocation to AAA-rated bonds has remained pretty high at 65 per cent. However, it has not avoided low-rated bonds - the exposure to below-AAA bonds has been in the range of 11-21 per cent.

The fund's average maturity has remained in the higher band of 15-23 months. That's because its allocation to gilts has been on the higher side in the category, ranging up to 18 per cent of its net assets. This higher maturity has also translated into higher volatility.

Hence, there is wide variation in the fund's best and worst returns (best one-month return is 0.51 per cent, while the worst one-month return is -2.13 per cent). Despite all these, the fund has managed to continuously beat its peers quite comfortably. Its one-year return of 4.3 per cent places it among the top half of the category. 
 

Top holdings
As on Oct 31, 2004	Value  (Cr)	Net Assets  (%)
Cholamandalam Inv. & Fin.	19.73	12.67
L&T Finance	15.04	9.66
Citifinancial Consumer Finance	14.89	9.56
Leaseplan	9.97	6.40
IDBI Capital Market Ser.	9.89	6.35
Citicorp Maruti Fin.	6.87	4.41
IDBI	6.70	4.30
GE Capital Services	6.08	3.91
Jet Airways India	5.16	3.31
Mahindra & Mahindra Finance	5.14	3.30
Finolex Cables	5.08	3.26
Great Eastern Shipping Co.	5.07	3.26
ICICI Bank (PTC)	4.37	2.81
TVS Finance & Services	4.06	2.61
Mahindra & Mahindra Finance	3.96	2.54
Ashok Leyland Fin.	3.80	2.44
ICICI Bank (debentures)	3.67	2.35
GoI 2009 11.99%	3.62	2.33
Ford Credit Kotak Mahindra	3.00	1.93
ICICI Bank (SO)	2.63	1.69

Outlook: Though Deutsche Short Maturity has higher volatility than some of its rivals, its record looks pretty good from a risk-adjusted viewpoint.

- Value Research