SBI Credit Risk Fund is a Debt-Credit opportunities fund which invests into corporate bonds. The fund was launched on 14th July 2004 with an investment aim to invest significantly in corporate bonds that are rated AA and below (except AA+ rated corporate bonds) and money market instruments to generate reasonable returns and maintain moderate liquidity in the portfolio. A highly experienced team provides resources to the fund. Before 2017, Dinesh Ahuja was the fund manager of SBI Credit Risk Fund who stepped down in January 2017. Since 2017, the fund has introduced with new fund managers, Lokesh Mallya and Mansi Sajeja. After new portfolio managers, SBI Credit Risk Fund has generated below-average returns.
The experts at MySIPonline have analysed the fund’s performance and come up with challenges in front of new portfolio managers in maintaining the SBI Credit Risk Fund.
No Experience in Credit Funds
SBI Credit Risk Fund has an experienced credit research team which provide reliable outputs by exploring the credit space. Experts do not doubt the efficiency of the team in investment universe as they are one of the strong points of the fund. But, as the fund managers are very new to the portfolio of credit funds, it may be challenging for them to match up with the team to generate a positive outcome.
Fulfil Investment Objective
The fund managers have the challenge to maintain a minimum interest rate exposure and add the significant bonds to maintain credit risk. They are required to apply the bottom-up approach with liquidity and quality filters to the capital structure which can help the fund to remove companies with negative returns. The fund managers are also required to look for the covenants to save the fund in downside conditions.
Utilise Flexibility to Implement the Trades
The fund managers of SBI Corporate Bond Fund G have the power to apply the trades along with adequate leeway to express their opinions. This freedom ensures that the fund managers should take a prudent decision. Further, they are also required to prove their excellence in front of the risk-management team as they review the portfolio to make sure that the fund manager follows all the guidelines while making a decision.
Cautious Move with Liquidity and Credit Risk
The managers are required to be cautious about the liquidity and credit risk to avoid defaults.
Maintain the Performance Record of Past Manager
Mr Ahuja, the previous fund manager of SBI Credit Risk Fund, has maintained the fund so well under his leadership. His exceptional skills had helped the fund to sustain the different market conditions and provide adequate returns. The new fund managers have not proved their ability yet. SBI Credit Risk Fund has an excellent record of last 3-years returns. The expectations from new fund managers are quite high as the previous fund manager has set a remark of performance to beat.
Overall, the new fund managers of SBI Credit Risk Fund have so many challenges to maintain the risk-adjusted returns generated by the fund previously. If you have any query regarding the regular plan, you can mention in the below-provided link to get assistance from MySIPonline ASAP. https://goo.gl/WofRJm
