Our analyst recently reviewed IDFC Super Saver Income Fund, the Short Term (S/T) and Medium Term (M/T) versions.
Both funds fall into the short-term bond category and are managed by Suyash Choudhary. Our analyst has assigned each a neutral rating.
The investment strategy plied in both cases is relatively simple. The funds are managed with a cautious approach by constructing a portfolio composed of high-credit-quality instruments. The investment strategy defines boundaries within which investments are made. For instance, it states that the average maturity will be broadly around two years in S/T and four years in M/T. Additionally, the strategy in S/T doesn’t permit investments in government securities, further restricting the manager’s hand. In the case of M/T, the cap of 25% on government securities has been done away with.
Choudhary is a seasoned manager in running duration strategies. His strength lies in his in-depth understanding of the macroeconomic environment, and his ability to anticipate interest-rate movements and identify attractive investment opportunities across market segments such as corporate bonds and government securities.
Though the constraints haven’t allowed him to play to his strengths, both the funds have beaten the category average over the years. The S/T fund did underperform the category average in 2010, in 2013 the M/T underperformed.
| Performance (%) |
| Period |
S/T |
M/T |
Category Average |
| 2006 |
6.07 |
6.68 |
5.74 |
| 2007 |
9.15 |
7.17 |
6.89 |
| 2008 |
13.25 |
15.49 |
10.33 |
| 2009 |
5.41 |
5.63 |
5.22 |
| 2010 |
3.71 |
6.71 |
4.23 |
| 2011 |
9.20 |
9.16 |
8.03 |
| 2012 |
9.32 |
9.95 |
8.99 |
| 2013 |
7.63 |
5.75 |
6.64 |
| 2014 |
10.10 |
10.82 |
9.39 |
| 2015 |
8.15 |
7.81 |
6.91 |
| 5 years |
8.97 |
8.86 |
7.72 |
| 3 years |
8.50 |
7.70 |
7.05 |
| 1 year |
8.40 |
8.25 |
6.98 |
Year-to-date returns as on June 8, 2016
Our concern is the key-man risk with regards to Choudhary. He currently manages eight (out of 13) open-ended fixed-income funds. It will certainly help to see an experienced and stable team around him leading to a reduced workload.
You can read the brief analysis of each fund here: IDFC Super Saver Income Fund – Medium Term Plan and IDFC Super Saver Income Fund - Short Term. Both are regular plans of growth schemes.
