ICICI Prudential All Seasons Bond Fund: Worthy Of Its 'All-Season' Name

Interest rates have peaked and central banks across the world have been able to bring inflation into the comfort zone. The US Federal Reserve had also in its recent policy meet in March 2024 hinted at three rate cuts this year. Now, bond yields are in the downward spiral because of anticipated rate cuts. As such, investors are in a dilemma whether they should continue sticking with short-term debt funds or move to long-term ones. If you are also in such a dilemma and want to take advantage of the existing market scenario with lesser volatility, you may consider ICICI Prudential All Seasons Bond Fund.

Portfolio

The scheme’s objective is to optimise returns through active duration management. It follows an in-house debt valuation model to take duration calls in the portfolio, which makes it less volatile as compared to its peers. The investment strategy revolves around structuring the portfolio in a way that the impact of adverse price movements is minimised. When interest rates are high, it will behave like a long-duration scheme and when rates are low, it will behave like an accrual scheme.

The fund also has the right mix of corporate and sovereign bonds. At present, the portfolio is tilted more towards government securities in anticipation of rate cuts. Also, during the 2018 debt crisis, when debt funds were in the spotlight due to default on papers, all debt funds from ICICI Prudential Mutual Fund came unscratched. Manish Banthia, chief investment officer (CIO) and fund manager of the scheme, who has been at the helm for the last 10 years, avoids investing in low-rated papers, which has worked well for it.

Performance

On a calendar-year basis, the fund has beaten both its benchmark and the category average in nine out of 10 years. In the last five years, it has given returns of 8.30 per cent against the category average of 6.98 per cent and benchmark of 7.68 per cent.

OLM Take

Low volatility, lower expenses, and sound management makes it an all-weather fund for investors in the debt space.

kundan@outlookindia.com