NFO Review: Baroda Pioneer Ultra Short Duration Fund opens for subscriptionBaroda Pioneer Mutual Fund has opened the Baroda Pioneer Ultra Short Duration Fund for subscription today. The fund will remain open for subscription till May 29th, 2018. It will be an open-ended fund meaning that you can also enter the fund after it is launched. It will be open for subscription and redemption on all trading days, like other open-ended funds.

An ultra-short duration fund according to SEBI is one which has a Macaulay Duration of 3 months to 6 months. This will also be the case with Baroda Pioneer Ultra Short Duration Fund. A Macaulay Duration of this nature implies a relatively low-interest rate risk.

The fund will allocate 0-80% of its portfolio to debt instruments, 20-100% to money market instruments and 0-10% to REITs and InVITs. The benchmark for the fund is the CRISIL Ultra Short Term Fund Index.

RupeeIQ Take

Ultra short-term debt funds carry a relatively low risk and low reward profile compared to longer-term debt or equity. Risk management and low fund management costs make a big difference to returns.

Baroda Pioneer Mutual Fund has some unexpectedly good funds in the short-term debt space. Its short-term debt fund has a five-star rating from Value Research and its treasury advantage fund has a four-star rating. The former has an 8.1% CAGR over the past three years and the latter has an 8.19% CAGR. They have both beaten Value Research benchmarks and category averages over the past three and five years. They are managed by the same fund managers as those proposed for this NFO.

The benchmark of the fund is also well chosen unlike the somewhat ‘convenient’ benchmark chosen for various short-term debt funds.

Key Details

NFO Period: 24th May to 29th May 2018

Options: Growth, Daily Dividend, Weekly Dividend

Fund Managers: Alok Sahoo and Hetal Shah

Minimum Subscription Amount: Rs 5000

Minimum Redemption Amount:

Plans: Regular and Direct

Author
Neil Borate

Neil Borate is Deputy Editor, RupeeIQ. He can be contacted at neil@rupeeiq.com.