This spurt in the fund s NAV also gave it a higher base to generate further returns. This, according to the fund management, in part explains the funds low three-month returns, which on May 31, stood at 1.21 per cent. Another factor has been the fall in gilt prices over the last three months. Responding to this, the fund has reduced its exposure to government paper from 50 per cent of the portfolio in April end to 42.28 per cent in May end. The average maturity of government securities stands at 3.5 years pointing to more short and medium term papers.
Corporate bonds constitute the fund s other holdings.
At the time of the fund s launch there was talk of an NSE listing. This has however, not yet taken place. The fund management has indicated that it has sought all clearances for this to expedite the process as and when it happens. The crucial factor underlying a debt fund s performance is interest rate movement. For the short-term, the fund management does not see any further rate cuts.