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Chola Triple Ace

Dhirendra Kumar

Chola Triple Ace, as the name suggests, is an intermediate debt fund investing predominantly in corporate securities with the highest credit rating. The fund launched in March 1997, has been consistent in its dividend payouts having till date paid a total dividend of 33.5 per cent in its dividend option. The fund is available at nil entry load, charges a 0.5 per cent redemption load for exits within 3 months.

Chola Triple Ace has since its launch given an annualised return of 13.21 per cent. The fund has throughout, clearly shirked away from following an aggressive strategy of being too short or long in its outlook and instead has opted to have a portfolio of of medium term tenure.

Though the conservative strategy could never take the fund to the top, it has nevertheless yielded above average returns. The strategy proved rewarding in its early stages of the fund when the fund gained 10.6 per cent till September 1997 as against an average return of 5.74 per cent by the funds in its category. The sharp fall in the interest rates during the third quarter of 1997 saw the fund gain handsomely.

The fund got hit during the short term volatility in early 1998. During the subsequently rising interest rates through 1998, the fund (with maximum allocation to AAA rated securities) lagged its aggressive peers that largely had a shorter term portfolio orientation. However, the fund improved its performance towards the latter half with investments in floating rate bonds (FRBs) accounting for a fourth of the portfolio.

The medium term portfolio tenure of the fund proved beneficial during the rate cuts in February 1999 and through the falling interest rates in 1999, during which the fund also timely pared its holdings in FRBs.

The fund in the year 2000 has maintained a maturity profile of over 3 years. Currently the in the short run, the fund expects the interest rates to move up and hence is looking to reduce its maturity profile from 3.54 years to 3 years. As on May 31, 2000, fund has 88 per cent allocation to AAA rated securities, while the gilts accounted for 9 per cent.

The fund for its high credit quality and medium term outlook will yield steady returns with less volatility.

Fund Basics
Objective	Size (Rs cr)	NAV:20/06/2000	Exit Price	Entry Price	Total Returns (%)
Income	52.85	15.04	15.04	15.04	13.15%
Benchmark Comparisons (%)					16/6/00
	1M	3M	6M	1Yr	3Yr
Fund	0.7	2.4	7.0	13.0	13.2
I-BEX Total	-1.5	1.7	7.1	15.3	14.8
Obj. Avg.	0.1	2.2	6.4	12.4	12.8
Top Holdings (31/5/2000)					Net assets (%)
National Aluminium Co.					12.16
G E Capital Services					11.58
Indian Railway and Finance Corporation					9.73
Ford India					9.56
ABN Amro Bank					9.49
Larsen & Toubro					9.28
Citibank					9.01
HPCL					8.94
GOI 2003					5.03
Citi Corp Finance					3.66
GOI 2004					1.95
Citi Corp Finance					1.86
GOI 2005					1.8
ICICI					1.8
HDFC					0.97

Source: Value Research

Fund File

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