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Home > Money > Mutual funds > Fund File
October 28, 2000
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Prudential ICICI Liquid Plan

Dhirendra Kumar

Prudential ICICI liquid fund is a short-term debt fund launched in June 1998. The fund invests predominantly in money-market instruments, commercial papers and treasury bills. The fund is available on a no-load basis but levies a contingent deferred sales load of 0.25 per cent for redemptions within 5 days. The fund offering dividend reinvestment option as well besides growth option, has been paying weekly dividends since April 2000.

Short-term debt funds are an ideal investment for a short period when you are flush with funds and there is still time for it to be used for its intended purpose. And the investor wants to outplay the yield in the short-term bank deposits without risking his principle. The fund is a safe investment bet to put short-term money.

Prudential ICICI liquid fund has since launch given an annualised return of 9.68 per cent. When interest rates rise, price of debt instruments fall and vice versa with greater impact in instruments with longer maturity tenure. With predominant investments in money market securities – instruments that have the lowest maturity profile, the risk on the interest rate front calibrates to negligible. This in turn alienates the liquidity risk as well. A further vindication of its immunity to risks is its monthly returns that were consistently positive averaging to 0.77 per cent per month even during the recent turbulent markets when the medium-term debt funds were on a downturn.

The fund is diversified across call money, commercial papers, triple A rated corporate instruments and gilts. While the fund has strictly held its maturity with in a year’s term, within this tenure the fund has actively moved in and out of maturity profiles. For instance in the light of a interest rate tightening earlier it deftly reallocated its portfolio to the shorter end. As on September 30, 2000 fund has a maturity profile of 1.9 months with call money accounting for 50 per cent, and commercial Papers and AAA bonds accounting for 28 per cent and 17 per cent of the corpus respectively. The fund also offers easy exit within 24 hours as also cheque writing facility on its investment after 5 days of investment.

Fund Basics          
Objective Size (Cr) NAV: 23/10/2000 Exit Price Entry Price Total Returns(%)
Income 1039.52 12.42 12.42 12.42 9.68%
Benchmark Comparisons (%)        31/8/2000
  1M 3M 6M 1Yr 3Yr
Fund 0.79 2.59 4.87 9.81
JP Morgan Tres. Bill Index 1.15 2.12 4.35 9.88 9.59
Obj. Avg. 0.69 2.26 4.34 8.67 9.28
Top Holdings (30/9/2000)         % of Assets
Larsen & Toubro (CP)         6.51
IDBI (CP)         3.92
G E Cap. Ser.(CP)         3.91
Telco (CP)         3.34
Asian Paints(CP)         1.96
IPCL(CP)         1.96
Tata Electric (CP)         1.96
HPCL (CP)         1.95
G E Capital Services (NCD)         1.76
Ass. Fin.Serv. (CP)         1.46
ACC (CP)         1.43
Reliance Ind. (NCD)         0.98
Citi Corp Finance (NCD)         0.98
Birla AT&T (NCD)         0.98
Finolex Cables (CP)         0.97

Source: Value Research

Fund File

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