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Dundee Liquidity Fund

Dhirendra Kumar

Dundee Liquidity Fund is a short-term dedt fund seeking to generate returns with a minimum 50 per cent allocation to money market and the balance in debt instruments. The fund charges neither an entry nor an exit load. The fund in its dividend option pays weekly dividend and has till date paid out 13.68 per cent dividend.

Dundee Liquidity Fund, launched in February 1999. Since launch it has given an annualised return of 11.95 per cent. The returns are among the highest in its category primarily because the fund has maintained a maturity profile of more than one year. The falling interest rates since July 1999 and a relatively longer tenure portfolio has seen the fund post, on an average, a return of more than 40 basis points than its peers. The fund in the month of March took a major leap into the medium-term tenure increasing its maturity profile to more than two years. Besides, the 37 per cent allocation to Gilts and 19 per cent in AAA saw the fund gain 3 per cent in the two months ending February 2000, when the bond markets rallied on the rate cuts in Savings Instruments. The peers of the fund had returned in the range of 1.50 per cent.

Currently, fund has a maturity tenure of marginally less than two years with an asset allocation between Gilts (28 per cent), AAA paper (20 per cent), P1+and Commercial Papers (11 per cent) and Cash (41 per cent).

Higher returns, on the back of longer portfolio tenure, are one side of the story while the flip side is a higher sensitivity to interest rate risks. The higher exposure to Gilts will further add to the volatility. Investors looking for returns better than short-term debt funds with moderate risk taking appetite may invest in the fund.

Fund Basics
Objective	Size (Rs cr)	NAV:27/6	Exit Price	Entry Price	Total Returns (%)
Income	8.58	11.65	11.65	11.65	11.95%
Benchmark Comparisons (%)					23/6/2000
	1M	3M	6M	1Yr	3Yr
Fund	0.69	2.26	5.88	12.21	-
I-BEX Total	-1.22	2.01	6.75	15.14	14.45
Obj. Avg.	0.67	1.40	4.08	9.61	-
Top Holdings (31/5/2000)					Net assets (%)
Call Money					40.72
9.9% GOI 2005					28.53
10.45% ICICI 2001					6.69
15.5% IDBI 2005					6.66
Associates India Financial					5.59
Tata Chemicals Ltd.					5.54
Top Holdings (31/3/2000)					Net assets (%)
Call Money & Cash					30.73
14% IDBI Bonds					17.97
International Distilleries India					16.28
Associates India Financial					16.19
GE Capital Deep Discount Bond					10.17
13.50% ICICI Bonds					8.66

Source: Value Research

Fund File

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