Jardine Fleming India Bond Fund

Dhirendra Kumar

Jardine Fleming India Bond Fund is a medium-term debt fund launched in November 1997. The fund seeks to achieve returns mainly with a quality portfolio. Till date, the fund has paid two dividends in 1999-2000 aggregating to 12 per cent. The fund charges a 1 per cent entry load on investments less than Rs 100,000. It also levies a 0.5 per cent exit load for redemption within six months. Since its launch, the fund has given an annualised return of 12.25 per cent.

This fund has emerged as an average-sized fund in the last few months. However, despite the jump in assets, the fund has only marginally increased its investment in gilts to 30 per cent.

JF India Bond Fund gives priority to investing in instruments with high credit quality - gilts and triple A-rated corporate papers, which constitute an average 80 per cent of the portfolio. These instruments help solve the twin problems of credit and liquidity risks. While a higher exposure to top quality paper translates into a lower interest income, the fund has sought to partially offset this with a marginal exposure to papers with lower credit quality, which offer a higher coupon.

Besides, the fund has had a conservative approach towards its maturity profile and has stayed away from taking a sizeable exposure at the longer end of the yield curve. By March 2000, the maximum average maturity had stretched to three years. Nevertheless, the strategy followed by the fund yielded good performance with a gradual decline in interest rates, with an annualised return of 14.4 per cent till February 2000.

But in spite of being cautious on the interest rate front, the fund has not taken very well to the recent turbulence in the debt markets. A higher loss than its peers during the bearish market in March 2000 and again, during the interest rate hike in July, has pulled the fund down. The fund suffered the maximum loss of 1.09 per cent among open-end debt funds in the month of July.

The fund is clearly not a top of the category fund, but is not lower down on the performance ladder either. The fund holds a good appeal for its quality portfolio.

Fund Basics
Objective	Size (Cr)	NAV:21/8/2000	Exit Price	Entry Price	Total Returns(%)
Income	225.60	13.72	13.72	13.86	12.25%
Benchmark Comparisons (%)					18/08/2000
	1M	3M	6M	1Yr	3Yr
Fund	-1.30	-0.44	1.78	10.39	—
I-Bex Total	-1.36	-1.12	1.90	12.35	11.97
Obj. Avg.	-0.64	0.28	3.03	10.20	11.90
Top Holdings (14/7/2000)					Net assets (%)
GOI 2004					9.88
GOI 2009					9.74
Tata Chemicals 2003					4.91
GOI 2003					4.70
Indian Oil Corporation 2007					4.62
Indian Oil Corporation 2003					4.50
Indian Oil Corporation 2004					2.78
Larsen & Toubro 2006					2.57
ICICI 2001					2.46
HDFC 2007					2.44
Larsen & Toubro 2006					2.44
ACC 2005					2.43
Export Import Bank of India 2001					2.38
Ford India 2006					2.37
Max India Ltd 2003					2.37

Source: Value Research

Fund File

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