PDF Downloads - JP Morgan Asset Management

Instruments Indicative Risk profileallocation(% of net assets)Money market and *Debt 65 - 100% Lowinstruments includinggovernment securities withmaturity / average maturity /residual maturity / interestrate reset not greaterthan 1 year.*Debt instruments with 0 - 35% Low to Mediummaturity / average maturity /residual maturity / interestrate reset greater than 1 year.*Debt Instruments include securitised debt. Securitised debt can be upto 50% of the net assets. Investment in Derivatives - Gross exposure upto 50% of the net asset of the Scheme.Floating rate debt instrumentsare debt instruments issued by Central / State Governments,corporates, PSUs, etc. with interest rates that are reset periodically.The periodicity of interest reset could be daily, monthly, quarterly, halfyearly, and annually or any other periodicity that may be mutuallyagreed between the issuer and the Fund. The Scheme shall not investin foreign securitised debt.Money market instruments include commercial papers, commercialbills, treasury bills, Collateralised Borrowing and Lending Obligations(CBLO), Government Securities having an unexpired maturity up to oneyear, call or notice money, certificates of deposit, usance bills and anyother like instruments as specified by the RBI from time to time.The Scheme can invest up to 50% of net assets in foreign securities.The cumulative gross exposure through equity, debt and derivativepositions should not exceed 100% of the net assets of the Scheme.Cash or cash equivalents with residual maturity of less than 91 days willbe treated as not creating any exposure. The Scheme shall not engagein stock lending. The scheme will not take any leverage position inderivatives. The total investment in debt securities and gross exposurein derivatives, if any, shall not exceed the net assets of the scheme.However, the Scheme can borrow in accordance with SEBI Guidelines.The Scheme retains the flexibility to invest across all securities in thedebt and money market instruments. The Scheme may also invest inunits of debt and liquid Mutual Fund schemes.The endeavour of the scheme is to maintain the modified duration in arange of 1-3 years depending upon interest rate view. However, this canundergo a change in case the market condition warrant and accordingto Fund Manager's view.D. SCHEME'S INVESTMENTThe Scheme may invest in the following asset classes:(a) Money market instruments (money market instruments includecommercial papers, commercial bills, treasury bills, GovernmentSecurities having an unexpired maturity up to one year, call ornotice money, certificates of deposit, usance bills and any other17like instruments as specified by the RBI from time to time);(b) Debt instruments issued by Central / State Governments,corporates, PSUs, etc. with interest rates that are resetperiodically. The periodicity of interest reset could be daily,monthly, quarterly, half yearly, and annually or any otherperiodicity that may be mutually agreed between the issuer andthe Fund;(c) Any other Securities / asset class / instruments as permitted underthe SEBI Regulations.The Scheme shall not:(a) invest in foreign securitized debt; and(b) engage in stock lending and borrowing.Change in Investment PatternSubject to the SEBI Regulations, the asset allocation pattern indicatedabove may change from time to time, keeping in view marketconditions, market opportunities, applicable regulations and politicaland economic factors. It must be clearly understood that thepercentages stated above are only indicative and not absolute and thatthey can vary substantially depending upon the perception of theInvestment Manager, the intention being at all times to seek to protectthe interests of the Unit holders. Such changes in the investmentpattern will be for short term and defensive considerations and withthe intention of protecting the interests of the Unit Holders. In theevent of deviations, rebalancing will normally be carried out within 30Business Days.Subject to the above, any change in the asset allocation affecting theinvestment profile of the Scheme shall be effected only in accordancewith the provisions of sub regulation (15A) of Regulation 18 of the SEBIRegulations, as detailed later in this document.E. INVESTMENT STRATEGIESThe domestic debt markets are maturing rapidly with liquidityemerging in various debt segments through the introduction of newinstruments and investors. The objective will be to allocate the assetsof the Scheme between various money market and fixed incomeSecurities with the objective of providing liquidity and achievingoptimal returns.The actual percentage of investment in various money market andother fixed income Securities will be decided after considering theeconomic environment including interest rates and inflation, theperformance of the corporate sector and general liquidity and otherconsiderations in the economy and markets.The investment team of the AMC will carry out rigorous in depth creditevaluation of the money market and debt instruments proposed to beinvested in. The credit evaluation includes a study of the operatingenvironment of the issuer, the past track record as well as the futureprospects of the issuer and the short term / long term financial healthof the issuer.The portfolio duration will undergo a change according to the expectedmovement in interest rates. Liquidity conditions and other macroeconomicfactors affecting interest rates shall be taken into accountfor varying the portfolio duration. Under normal circumstances, if theinterest rates move down, the duration of the portfolio shall beincreased and vice versa.