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UTI Credit Risk Fund to Provide Reasonable Income

In Business
February 16, 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, “The MPC provided a positive surprise for the market by giving a rate cut of 25 bps primarily on revised inflation estimates giving the policy an extremely dovish tone. While the change in stance was largely factored in by markets, the rate cut was expected by only a few.

The RBI’s overall dovish outlook on inflation and mention to support private investments amidst a mildly open output gap led to expectations of probable further rate easing ahead. The Budget announced fiscal slippage for FY19 and took an expansionary approach for FY20 this may impart inflationary impulses ahead.

While the near- term inflation numbers are likely to remain benign, supply side pressure might put upward pressure on inflation. We believe going forward the yield curve may steepen with the shorter end of the curve falling due to the dovish undertone and long end of the curve remaining sticky on fiscal concerns and overhang of huge supply of Central and State government bonds.

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 8.41% against benchmark returns of8.29% since inception (as January 31, 2019)