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UTI Credit Risk Fund Through Active Portfolio Management

In Business
January 11, 2019

UTI Credit Risk Fund attempts to provide reasonable income by investing in high income accruing securities, along with the possibility of capital appreciation through active portfolio management to gain from change in credit/interest spreads.

The fund has a high income accrual portfolio with maturity between 2 to 4 years which has an ability to generate relatively superior risk adjusted returns.

Ritesh Nambiar Fund Manager, UTI AMC said, “In the recent RBI monetary policy RBI reduced the inflation range and mentioned that if the upside risk on inflation does not pan out they would look at a taking an appropriate rate action which indicated that there is room for rate cut going ahead. RBI also mentioned that it would continue to announce OMO’s till end of Mar’19 and may increase the frequency and quantum if need be led to softening of yields. We believe that with no change in stance the possibility of rate hike is ruled out in near term. In light of the developing macro-economic environment there is a possibility of change in stance in the next policy. RBI and the market participants will continue to monitor the environment to ascertain the possibility of rate cut. Impact of OPEC’s production cut and result of State election on yields would also be a key factor which would be tracked by the market participants. In such an environment, we believe funds having a combination of higher income accrual and short to medium term duration like UTI Credit Risk Fund would provide a good investment opportunity for the investors”.

This fund can form part of an investor’s strategic debt allocation to build a balanced portfolio. The fund has outperformed the benchmark, CRISIL Composite Bond Fund Index across time horizons. The fund has generated a return of 8.44% against benchmark returns of 8.25% since inception (as November 30, 2018)