'Risk-averse investors should go for liquid-plus , funds when rates are high'

The markets expect the Reserve Bank of India (RBI) to raise the key policy rates by another 25 basis points (bps) on May 3. The RBI is likely to keep systemic liquidity in the deficit mode to make policy rate effective to control inflationary pressures. In such a scenario, Dhawal Dalal, senior vice president & head of fixed income, DSP BlackRock Mutual Fund, is positioning their fixed income funds in a defensive manner by keeping the maturity profile low for most of the funds. He tells DNA that this move will enable them to reinvest their maturing assets at a higher yield without compromising on the credit quality of assets and help in generating better returns.

Can you tell us about your debt product portfolio? Which are the most popular ones among the retail investors?

As on April 26, we managed around Rs.31,000 crore assets. Out of this, approximately Rs.16,000 crore is in fixed income funds. Last year, fixed maturity plans (closed-ended fixed income funds) have witnessed significant growth. These funds are preferred by investors in a rising interest rate environment due to their short tenure and lower tax rates when compared to bank fixed deposits.

DSP BlackRock manages around Rs.8,300 crore assets under fixed maturity plans. Liquid funds also witnessed healthy growth last year. These funds have a typical average maturity of around 40 to 50 days. DSP BlackRock Liquidity Fund has around Rs.4,000 crore assets under management. The Liquid-Plus category (ultra-short income funds) has also experienced sustained inflows from retail and high net worth individuals over the last year due to relatively low withholding tax rate as compared to Liquid Funds. DSP BlackRock Money Manager Fund manages around Rs.2,350 crore of assets while DSP BlackRock Floating Rate Fund has around Rs.480 crore of assets under management....(Read More)