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Reliance Low Duration Fund belongs to the newly introduced category of Low duration debt mutual funds. It was previously known as Reliance Money Manager Fund. The fund aims to provide capital appreciation in a shorter tenure of more than 3 months at a low risk through debt instruments of good quality. Reliance Money Manager Fund is a top performer in its category which is appreciated by lacs of investors and has a gigantic AUM of Rs 14,230 crore as of 31st Aug 2018. The experts at MySIPonline have extensively analysed the potential of the scheme to provide the correct details of the same to the investors.
Investment Strategy of Reliance Low Duration Fund (G)
The fund managers invest the majority of the corpus in the securities with higher credit ratings to generate the risk free returns in the short terms. The credit ratings of the instruments are A1+ and AAA. Debentures, commercial papers, bonds, and certificates of deposit from various private and public sector firms constitute to a total of 163 instruments which have an average maturity of 0.68 years while the category’s average is 0.70. As the maturity period is slightly lower than that of the peers, the yield on maturity is also low. The average rate of return on maturity of the instruments is 8.14% while that of the category’s average is 8.22%. Due to high quality securities, the rate of return is less sensitive.
What Is the Risk Involved?
By looking at the risk parameters of Reliance Low Duration Fund for last 3 years, it can be observed that the standard deviation is lower than that of category average while beta is much higher. If we compare the risk to reward ratio, Sharpe and Sortino ratio are moderate. Hence, it can be concluded that concerning risk and the returns generated Reliance Low Duration Fund is a decent performer in its category which neither involves very low risk nor it is highly conservative but manages a good balance between both.
Returns in the Past
Since inception in March 2007, Reliance Low Duration Fund has generated an annualised return of 8.13%. For a low duration fund, it provides adequate returns and has beaten the category’s average and benchmark with a significant margin.
Apart from 2010 and 2011, Reliance Low Duration Fund has consistently high returns well above the benchmark and peers.
Reliance Low Duration Fund is suitable for the investors who are in possession of extra cash which won’t be required for a few months. It adds a decent capital appreciation in a short tenure. The experts at MySIPonline suggest this scheme to the conservative investors who seek to invest for a short term. Those who want higher returns can go for longer duration debt funds or equity schemes.