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Alliance Liquid Income

Dhirendra Kumar

Alliance Liquid is a medium-term debt fund launched in March 1997. While it is a no-load fund, the scheme charges a contingent deferred sales charge of 0.5 per cent for redemption within six months. The fund has a track record of half-yearly dividend payment, which aggregates to 40.1 per cent to date, including the recent 3.1 per cent pay out in September 2000.

Since its launch in March 1997, the fund has posted an annualised return of 12.04 per cent on the back of a conservative portfolio. Bond prices are closely linked to the prevailing interest rates. As interest rates move up, bond prices move down and vice versa. Thus lower maturity portfolios are less susceptible to price changes. Alliance Liquid Income has guarded the portfolio against interest rate risk by largely maintaining a portfolio with a lower maturity. While the fund did stretch the maturity earlier this year to 4.1 years to take part in the price rally, in light of the interest rate volatility it was actively pruned.

While being conservative on interest rate front, the fund has held on to a mixed portfolio in terms of credit quality with a reasonable exposure to double A paper. These instruments earn higher coupon income for their lower credit quality. While earlier in 1999, the fund was largely parked in AAA debt instruments, AA rated instrument also accounted for a sizeable 40 per cent of the corpus. However, in recent times the fund has increased the credit quality of the portfolio with triple AAA rated instruments accounting for an average 80 per cent of the corpus. Also, the surging corpus has seen the fund, increase its exposure to gilts which are both high on credit and liquidity front.

With a growing corpus, the fund has built a portfolio of liquid AAA rated securities gradually. An average performer in the Value Research medium-term debt category, Alliance Liquid Income today is a large-sized conservative fund, with a quality portfolio.

Fund Basics
Objective	Size (Cr)	NAV: 27/11/2000	Exit Price	Entry Price	Total Return (%)
Income	806.72	15.30	15.30	15.30	12.04%
Benchmark Comparisons (%)					17/11/2000
	1M	3M	6M	1Yr	3Yr
Fund	1.06	2.83	2.76	10.59	10.94
I-Bex Total	1.92	3.27	1.95	12.23	11.42
Obj. Avg.	1.14	2.63	2.80	10.40	11.03
Top Holdings (31/10/2000)					% of Assets
GOI 2004					19.41
IDBI					9.27
ICICI Bank					7.56
GOI 2002					6.58
GOI 2001					6.23
Reliance Industries					4.35
GOI 2004					3.60
GOI 2001					2.62
Reliance Capital					2.51
Ashok Leyland					2.27
India Infrastructure Developers					1.87
Konkan Railway					1.86
G E Capital Services					1.71
Telco					1.55

Source: Value Research

Fund File

Money

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