MUMBAI:
After the start of rate hike cycle by RBI, investors are looking towards short term income funds to gain from high accrual coupled with income stability due to lower duration.
One such fund is UTI Short Term Income Fund which aims to generate reasonable returns with low risk and high liquidity from a portfolio of money market securities and high quality of debt with a average maturity cap of 4 years. The fund attaches importance to high credit quality and portfolio diversification.
Sudhir Agrawal, fund manager of UTI Short Term Income Fund says, “With the expectations of CPI inflation moving towards 5% in first half of next fiscal year, RBI may be under pressure to hike rates further to bring inflation closer to its target.
Further, increase in cost of imports due to depreciation of rupee versus dollar may result in upside risk to the CPI in coming few quarters. In such a scenario, investors should start shifting focus to short term income funds as these funds offer high accrual along with lower volatility. We have been recommending investors to look at our short term income fund with an investment horizon of 1 to 3 years.”
UTI Short Term Income Fund has been consistently outperforming its benchmark CRISIL Short-Term Bond Fund Index. Fund has given a return of 8.54% against its benchmark return of 7.58% since inception(as on October 31, 2018).
