Tata Short Term Bond Fund

Tata Short Term Bond Fund is one of the short-term debt funds which aims at providing promising returns to its investors via short-term debt funds. It is a moderately risky bond fund with a relatively lower expense ratio than others in the market.

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Fund in Brief

The Tata Short Term Bond Fund is an open-ended scheme investing in short-term debts, money market, and government securities. The fund is managed by Tata Mutual Fund. The fund portfolio's performance as per its benchmark in the past year has resulted in average maturity and a higher allocation of Government securities. The fund aims at generating regular income or appreciation over a short or medium period. 

The fund also strives to create a liquid portfolio of debt and money market instruments to provide substantial returns and liquidity to its investors.

Fund Facts

The following table shows the basic facts about the Tata Short Term Bond Fund:

Particulars

Values

Fund House

TATA Mutual Fund

Fund Type

Open-Ended

Expense Ratio

1.21%

Launch Date

8 August 2002

Return Since Launch

7.36%

AUM

Rs 2854 crores

Benchmark 

CRISIL Short Term Bond Index

SIP Minimum

Rs 1000

Lump Sum Minimum

Rs 5000

Risk Profile

Low to moderate risk

Investment Objective

The Tata Short Term Bond Fund works on creating a liquid portfolio of money market instruments and debt for providing reasonable returns and liquidity to customers. Investors seeking an accrual-based portfolio that matures within 1 to 3 years are ideal to invest.  

The investment objective of the Tata Short Term Bond Fund is to generate regular income or appreciation over a short period. Due to the uncertainties of the money market, there is no guarantee that the investment objective of this plan would be accomplished.

Fund Summary

The Tata Short Term Bond Fund has two types of plans, namely Regular Plans and Direct plans: 

  1. Tata Short Term Bond Fund Regular Plan

    • Risk: Moderate risk
    • NAV as of September 3, 2021: Rs 38.7836
    • Expense Ratio as of July 31, 2021: 1.21%
    • Returns (1 year): 4.04%
    • CAGR (since inception): 7.36%
  2. Tata Short Term Bond Fund Direct Plan

    • Risk: Moderate risk
    • NAV as of September 3, 2021: Rs 41.5566
    • Expense Ratio as of July 31, 2021: 0.29%
    • Returns (1 year): 5.03%
    • CAGR (since inception): 8.09%

Fund Return Summary

The following table illustrates the summary of market returns at Tata Short Term Bond Fund as of September 1, 2021:

Particular 

Year To Date

1 day

1 week

1 month

3 months

6 months

1 year

3 years

5 years

7 years

10 years

Fund 

2.06

0.05

0.16

0.5

1.22

2.78

4.15

5.66

5.75

6.73

7.50

CCIL T Bill Liquidity Weight

1.40

0.01

0.05

0.21

0.63

1.10

2.17

3.42

3.69

4.14

4.56

Short Duration Debt

2.50

0.06

0.20

0.66

1.31

3.01

4.75

6.3

6.24

7.11

7.65

Rank 

24

25

26

23

21

22

23

17

16

16

14

Fund in the ranked category

26

28

28

27

27

27

26

25

23

23

21

*Returns are subject to change. The investment risk in the investment portfolio is borne by the policyholder.

Pros and Cons

The following table shows the pros and cons of the Tata Short Term Bond Fund:

Pros

Cons

1-year returns are higher than the category average returns.

3-year returns are lower than the category average returns.

Zero Exit Load

5-year returns are lower than the category average returns.

Returns have been 6.87% per year over the last 10 years.

Returns over the last 6 months have been negative.

Low Expense Ratio

The scheme ranked at number 5 under CRISIL's Short Duration Fund Category.

Benefits of the Tata Short Term Bond Fund

Following are the benefits of the Tata Short Term Bond Fund:

  • As per the allocation of assets and the scheme's investment objective, the risk level associated with the scheme is moderately low.
  • Short Term Capital Gain or STCG from the debt component is added to the investor's income and then taxed according to the tax slab.
  • Long Term Capital Gain or LTCG component is taxed at 20% along with indexation gains.
  • There is no Entry Load in the Tata Short Term Bond Fund scheme. The Exit Load is 2% of the NAV, which is levied if the units are redeemed within a year from the allotment date.
  • At the Tata Short Term Bond Fund scheme, the minimum redemption is Rs 500 (50 units). The redemption would proceed further and is dispatched within 10 business days from the date of the receipt of the redemption request.
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Fund House Details

The Tata Short Term Bond Fund is managed by Tata Mutual Fund house, one of India's largest mutual fund houses by its asset size. It is a part of the Tata Group, which is amongst India's top conglomerates and largest industrial groups. 

The fund house has an AUM of Rs 48,202.34 crores as per the quarter ending June 2020. The fund house has been in operation for over 24 years. In totality, the fund house offers 26 debt schemes, 20 equity schemes, 2 ETF schemes, and 9 hybrid schemes. Tata Mutual Fund house has the vision to provide a healthy lifestyle to all its investors by securing their future financial needs.

Who Should Invest In the Tata Short Term Bond Fund?

The following types of investors should consider investing in Tata Short Term Bond Fund:

  • Individuals having a regular or fixed income
  • Investors of medium or short-term financial gains
  • Investors of debt, government securities, and money market securities
  • Investors with a low-risk appetite

In Conclusion

The Tata Short Term Bond Fund is an open-ended debt scheme. It is a short-term debt scheme that provides a regular fixed income over a short period by investing in debt securities, Government securities, and money market instruments.

FAQ's

  • Q1. What kind of Systematic Plans does Tata Short Term Bond Fund provide?

    Ans: The Tata Short Term Bond Fund provides the following types of Systematic Plans:
    • Systematic Investment Plans or SIPs
    • Systematic Withdrawal Plans or SWPs
    • Systematic Transfer Plans or STPs
  • Q2. What is the time duration of the Tata Short Term Bond Fund Scheme?

    Ans: Because of the open-ended nature of the Tata Short Term Bond Fund, its duration is practically unending.
  • Q3. Would I have to pay tax on my earnings from the Tata Short Term Bond Fund?

    Ans: No, you would not have to pay taxes on your gains as earnings from the Tata Short Term Bond Fund are completely exempt from income tax under Section 10(23D) of the Income Tax Act, 1961. 
  • Q4. What are the risks involved with investing in the Tata Short Term Bond Fund scheme?

    Ans: The standard risks involved in the investment in the said fund scheme are as follows:
    • The price, value, and interest rates of the securities are ever-changing. Their fluctuations would also affect the scheme's investments. Therefore, the investment's value could also increase or decrease at any given time.
    • The Tata Short Term Bond Fund does not guarantee profitable returns. 
    • Market risks influence mutual funds and securities, which do not ensure the investor whether the scheme would realize its objective or not.
    • The fund invests in securities that are subject to risks like trading volumes, liquidity risk, settlement risk, and default risk, which involves losing the principal amount.
  • Q5. What kind of risk mitigation strategies does Tata Short Term Bond Fund propose?

    Ans: To mitigate the risk of the issuer, the fund would consider the following factors:
    • Reach and size of the issuer
    • Infrastructure and follow-up instruments
    • Issuer's history and track record in that line of business
    • Data quality provided by the issuer
    • Credit enhancement for several types of issuers
  • Q6. What are the top holdings of Tata Short Term Bond Fund?

    Ans: The following table shows the top holdings by the fund and weightage:
    Holdings  Weightage 
    © Treps 8.94%
    7.32% Government stock 2024 7.67%
    Indian Oil Corporation Ltd. 4.78%
    6.18% Government stock 2024 4.09%
    7.68% Government stock 2023 3.96%
    Power Finance Corporation Ltd. 3.65%
    Chennai Petroleum Corporation Ltd. 3.49%
    Housing Development Finance Corporation Ltd. 3.48%
    Export-Import Bank Of India 3.46%
    Small Industries Development Bank Of India 3.43%
  • Q7. How does the Tata Short Term Bond Fund manage interest rate risks?

    Ans: To control and manage interest rate risks, the fund:
    • Keeps a close eye on events happening in the market
    • Does duration management actively
    • Manages portfolio exposure over several maturitie
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