With bond prices turning out to be almost as unpredictable as stocks, making the right forecasts on interest rate direction has been quite a difficult task. But this fund has managed it well, earning its good returns mainly through rightly timed duration calls on its portfolio. This fund sticks mainly to AAA-rated bonds or G-secs in its portfolio and earns much of its returns by taking duration bets. Having said this, the fund seems to hold a slightly contrarian view on rates currently as compared its peers, expecting rates to go up before they moderate over the next one year.

This fund has managed not just high but also consistent returns in the last ten years. It has trailed its benchmark just one year out of the ten. However, given that returns do rely on duration calls, they have fluctuated quite a bit from year to year. One-, three- and five-year returns on the fund are higher than category and five-year returns of 9.1 per cent rank high in the category. The fund's average maturity has witnessed a fair bit of change the past year, going from five years or so in April 2014 to over 13 years by January. But in line with unfolding risks to rate cut outlook, the maturity has since moderated to about 9.55 years. That's not very low when compared to more accrual-oriented peers but reflects the fund's near-term view on rates. The average maturity on the portfolio of 7.9 per cent reflects its preference for top credit quality.

This is a good fund for investors looking to make the most of falling rates. But given its reliance on rate calls, the NAV can be vulnerable.