NFO Update: Mahindra Manulife Short Term Debt Fund

Mahindra Manulife Mutual Fund, which was earlier known as Mahindra Mutual Fund is a 51:49 joint venture of Mahindra & Mahindra Financial Services and Manulife Investment Management (Singapore) Pte. The fund house is one of the youngest fund houses in India with a quarterly average asset under management (QAAUM) of Rs 5,058.05 crore at the end of December 2020. The fund house has launched ‘Mahindra Manulife Short Term Debt Fund,’ focussing on quality debt and money market instruments.   

The new fund offer opens on February 9, 2021, and closes on February 16, 2021. The scheme will reopen for continuous sale & repurchase from February 25, 2021. This fund falls under the short duration category as per SEBI re-categorisation norm.    

 Objective: The investment objective of the scheme is to generate income and capital appreciation through an actively managed diversified portfolio of debt & money market instruments, such that the Macaulay duration of the portfolio is between 1 year and 3 years.   

 Strategy: The fund manager will seek to play out the yield curve and exploit anomalies if any in the curve, for the portfolio construction after analysing the macro-economic environment including future course of system liquidity, interest rates and inflation along with other considerations in the economy and markets.  

The investment team will follow risk guard process, an internal research and process framework that focusses on the quality of business, financial & management, for security selection and monitoring. Also, as a part of the risk mitigation framework, the investment team would keep adequate liquidity buffers in the form of liquid securities to manage any drawdown.    

 Fund manager: The scheme will be together managed by Rahul Pal, Head-Fixed Income, Mahindra Manulife Investment Management, and Kush Sonigara, Research Analyst-Fixed Income. The performance of the scheme will be benchmarked against CRISIL Short Term Bond Fund Index.  

 Our view: The short duration bond funds in the last year on average have generated returns of 6.4 per cent whereas, in ten years, it has generated a return of 7.9 per cent. After the credit crisis and drop in the interest rate, the short duration funds remained a good bet. These funds are suitable for low-risk appetite investors, who seek quick returns and a steady flow of income without being affected by the daily changes in the bond markets, provided he invest for three years. We have always believed that you should wait for the portfolio to be built before investing in the fund.  

 Short Duration Bond Fund Performance