ICICI Prudential Short-Term Fund

• Low risk fund for short term goals
• Why this fund works

Invest in treasury bills, certificate of deposits, commercial papers and corporate securities.

Current yield to maturity of portfolio is healthy.

Over 82% of the securities are sovereign or carry the highest AAA or AI+ ratings.

As its bond fund it has zero exposure to Equity or Stocks.

As there’s consensus that interest rates have peaked and that with relatively be high inflation, there may be possibility of a reduction in rates later in the year.

However, we believe that this is going to be shallow rate cut cycle due to variety of reasons. At the same time RBI likely to keep liquidity tight in the system. There is no sign of going back on stance of withdrawal of accommodation from RBI.

Thus short term interest rates may still hold up for the forseeable future. In this regard ultra short-term funds can be considered by investors for parking their emergency funds or for short term goals.

The current Macaulay duration is healthy at 0.46 years (less than six months) as is the yield to maturity at 7.72 %. It is worth nothing that CPS and CDS of three months tenor are still available at yields north of 7 %.

Investors can consider the fund for short term goals for stable returns.

A blog from Santosh G Akerkar. For Educational and Awareness purposes.
Best Regards,
Santosh Akerkar