“When the economy is exposed to the problem of cost of money, the growth trajectory tends to slow down, which often indicates the turn of the interest-rate cycle,” said Saurabh Bhatia, head of fixed income at DSP Investment Managers, in an interview last week. “These become opportune times as you benefit from higher yields without diluting the credit or duration profile of the portfolio,” according to Bhatia, who oversees 380 billion rupees ($5.4 billion) in assets.
DSP’s company bond fund was the top performer among 17 rupee corporate note funds in the last six months, according to data compiled by Bloomberg. It returned 6.91 per cent in the period, compared with an average performance of 5.53 per cent, the data show.
Bhatia’s firm started the DSP Corporate Bond Fund in early September when yields on short-term debt surged to about 9 per cent after IL&FS’s defaults.
The yield on AAA-rated non-bank five-year bonds climbed five basis points to 8.53 per cent last week, still 11 basis points above the average during the past five years, according to Bloomberg-compiled data. It’s also above the average yield for all five-year AAA Indian corporate bonds by about 40 basis points.
DSP Investment Managers is part of the DSP group, a Mumbai-based financial services firm which started a stock broker business in the 1860s, according to the company’s website.