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Published on 21/04/2018 9:53:33 AM | Source: Morningstar Investment Adviser India Pvt Ltd

New coverage under Morningstar Analyst Ratings - Morningstar Investment

SBI Dynamic Bond Fund 

SBI Dynamic Bond Fund is among the few funds within the category that is dynamically managed and true to its mandate. Research is deeply rooted in the firm’s philosophy. Dinesh Ahuja is an experienced manager and has helped the fund build an impressive track record during his tenure. We also draw comfort from the stability of the investment team and their long tenure at the helm. The fund moves across the segment with an active duration strategy. In that context, the fund employs a bottom-up investment approach combined with a top-down overlay to generate superior risk-adjusted returns. Given its flexible mandate to move across the segment, the manager constructs the portfolio with primary focus on liquidity, and hence avoids taking credit bets. Hence, we have assigned the fund a Morningstar Analyst Rating of Bronze. 

SBI Corporate Bond Fund 

The fund has witnessed a recent change in the portfolio managers. Lokesh Mallya and Mansi Sajeja are the portfolio managers since February 2017, and also continue to contribute as research analysts. Despite the change at the helm, the fund’s investment strategy remains consistent. The process is purely bottom-up with a focus on high quality business models and maintaining a relatively more liquid portfolio. The fund’s investment team is highly experienced and adequately resourced, but the recent change in the portfolio managers together with corresponding below average returns despite competitive expense ratio, underpin the fund’s Morningstar Analyst Rating of Neutral.  

HDFC Prudence Fund 

We initiated the coverage on HDFC Prudence Fund which is also the first coverage from India Fund Moderate Allocation category.  

We have assigned the fund our highest conviction Morningstar Analyst Rating of Gold. A strong leadership, stable investment team, robust investment strategy and an impressive long-term performance provides HDFC Prudence an edge over other balanced funds; and that led us to gain conviction in this offering. The fund invests around 75% of assets in equities which tends to be higher than the category average of 65-70%. For the equity component, Jain invests across market segments and takes significant stock and sector bets. As a result, the fund courts higher risk than the norm which makes it an aggressive offering within the category. The fixed income strategy is relatively benign and doesn’t involve taking big credit and duration bets (particularly based on short-term news flows). The fund’s broader strategy is designed such that the fixed income component provides stability to the portfolio, whereas the equity component drives the performance. The fund, given its strategy, may witness short-term hiccups, but it has the means to reward patient investors favourably. In our opinion, it is an aggressively managed but compelling balanced fund for long-term investors. 

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