Birla Sun Life Short Term Fund -  Rating & Review - Best Low Cost Debt Fund

Birla Sun Life Short Term Fund –  Rating & Review – Best Low Cost Debt Fund

Roboadviso     Mutual Funds Rating     Posted On, Tue 18th July, 2017     No comments
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  • Birla Sun Life Short Term Fund
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Birla Sun Life Short Term Fund

Birla Sun Life Short Term Fund is a short term debt fund that invests in a diversified portfolio of money market instruments and debt of short to medium term maturity period. The aim is to earn higher level of yields at relatively low level of risk.

Here is a comprehensive review on the fund; let us understand if one should buy, sell or hold the fund.

Basic Costs and Information

The Birla Sun Life Short Term Fund was launched on March 03, 1997 and is considered a ‘moderately low’ risk fund according to the riskometer. The expense ratio for the fund is 0.31 percent.  As on June 30 2017, the fund has assets worth Rs. 18, 055 crore. The minimum investment needed for the fund is Rs. 1000; there is a minimum SWP withdrawal facility of Rs. 1000. The fund has no exit load.

The fund was managed by Prashant Dhonde, who passed the mantle to Kaustubh Gupta and Maneesh Dangi, who are managing the fund since April  2017. 

Fund allocation for Birla Sun Life Short Term Fund:

The top holdings of the fund are –

8.15% GOI 2026 ( Central Government Loan)

8.15 % HDFC 2018 (Bonds and Debentures)

8.55% Reliance Jio Infocomm 2018 (Debentures)

6.79% GOI 2029 (Government of India Securities)

7.85 Power Finance Corp 2019 (Bonds and Debentures)

Performance of Birla Sun Life Short Term Fund:

The fund has returned 8.99 percent in 1 year, 9.57 percent in 3 years, 9.48 percent in 5 years and 8.89 percent per annum in 10 years. If you look at the other funds in the category, Birla Short Term Fund has done a commendable job. The returns since launch has been at 9.53 percent.

Analysis

The Birla Sun Life Short Term Fund has consistently beaten the CRISIL Short-Term Bond Fund Index (benchmark) since inception, as well as the category average. 

If you had invested Rs. 5000 as a one-time sum in 2014, it would have grown to Rs. 6,577 in 2017 with a CAGR of 9.57 percent.  A monthly SIP of the same sum from 2014 would have earned you Rs. 2,07,605.

Birla Sun Life Short Term Fund has done a good job at managing the interest rate risk, by changing the modified duration in sync with the interest rate movements. For example, when the 10 year G-sec yields rose to 8.96 percent from 8.34 percent in the years 2012 and 2013, the fund cut down its modified duration from 1. 36 to 1.05 years.

The fund takes proactive steps in a falling interest scenario too. When the benchmark yield moved down from 8.45 percent to 7.54 percent from October 2014 to September 2015, the fund stepped up its modified duration from 1.51 to 1.9 years.

Birla Sun Life Short Term Fund is well protected as far as credit risk is concerned. It has its investments pooled in the highest rated debt papers and Government securities.  In the past 4 years especially, more than 90 percent of the portfolio has been invested in these papers. In these years, the fund’s exposure to Government securities also rose steadily.

Should I buy, sell or hold Birla Sun Life Short Term Fund?

By all means, it makes sense to buy it or if you have already invested, hold on it. We give it a thumbs-up as one of the best short term debt funds.

Pros

Excellent Fund Manager
Excellent Fund House
Excellent Performance
Excellent Consistency
Excellent Fund Size
Low Expense Ratio

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