The new portfolio strategy of the fund would be to keep a short average maturity to limit the interest rate risk, reported The Economic Times.
“With interest rate policy stance changing to neutral from accommodative, yields will have stable to rising bias. In such environment, Tata Corporate Bond Fund is positioned around lower duration spectrum with focus on accrual as well as credit quality,” said, Fund Manager, Amit Somani of Tata Corporate Bond Fund.
“The fund would generate accruals by taking exposure to short-term corporate bonds of high-quality issuers,” he added.
“As the maturity of the portfolio is lower, it would benefit investors in a rising interest rate scenario,” said, Head-Fixed Income, Murthy Nagarajan of Tata Asset Management.
The bond fund currently invests 80-100 per cent in corporate debt across maturities and ratings, 0- 20 per cent in other money market instruments.
The fund does not invest in government securities. The fund has returned 7.42 per cent in the last one year, 8.13 per cent in three years and 8.46 per cent in five years.