As of February 2025, the asset allocation of the Fund predominantly comprises placement in Treasury Bills, Treasury Bonds, and Reverse Repos against Government Securities (~96.70%), with minor allocation as Current account balances in AA-rated Bank (3.30%), and Others (0.02%). The upgrade reflects the Fund's improvement in its WAM and Duration which has reduced to 58 days and 72 days, respectively, as of January 2025. The Fund intends to keep its exposure limited to interest rate risk and credit risk by investing in securities of short tenor. The Fund's underlying commitment to high credit quality is evident from ~96.7% allocation of its assets in Government Securities that are liquid. During 2024, the Fund's returns have been at par with the peers. The top 10 investor concentration remains high at ~50.9%, exposing the Fund to redemption risk. Going forward, the Fund expects to adhere to its approved investment policy while making investment decisions based on prevailing market conditions.
It is imperative that the Fund investment allocations remain in line with its stated objective of very low credit risk. Any deterioration in the credit quality or liquidity profile of the Fund would have a negative rating connotation. Similarly, keeping WAM and/or duration low is critical.