106384  |  INF789F01AJ9  |  5 star  |  Neutral

NAV

$ 30.07

1-Day Total Return

-0.02
%
INR | NAV as of 12/15/2017 10:30:00 AM | 1-Day Return as of 15 Dec 2017

TTM Yield

0.00%

Load

0.00

Total Assets

125.2 bil

Expenses

0.94%

Fee Level

--

Turnover

1,111%

Status

Limited

Min. Inv.

10,000

30-Day SEC Yield

--

Category

Short-Term Bond

Credit Quality/Interest Rate Sensitivity

--
Author
Morningstar's Take | 31/10/2017
by Kavitha Krishnan

The portfolio manager’s above-average execution is reflected in the fund’s long-term performance. Despite this, the relatively high expenses on this fund restrict our conviction levels and lead to a Morningstar Analyst Rating of Neutral.

Sudhir Agarwal has been managing this fund since October 2012 and has been associated with UTI since 2009. We view his skill and experience in a positive light and think the overall execution of the strategy has been above average. Amandeep Singh Chopra heads the fixed-income team and we view his presence as a positive. Sudhir Agarwal has been managing a few of the largest fund offerings by the AMC and Ritesh Nambiar doubles as fund manager and head of credit research. Though Chopra's leadership capabilities stand out, there is a key-man risk associated with him. The analyst team consists of three members, including an economist. While we have conviction on the manager and the consistency of processes within the fund house, we are wary of the lack of experience on the analyst team.

The fund’s duration is typically maintained between one and four years. The manager’s focus lies in taking a combination of active duration bets and investing in high-quality credits to generate alpha at the shorter end of the yield curve. Agarwal takes some tactical exposure in G-Secs and state development loans with a view to take advantage of interest-rate movements and maintain liquidity levels in the portfolio. There is greater focus on risk avoidance as compared with investing with a view to generate top-quartile performance. Though this could lead to the fund house adopting a slightly conservative stance in comparison to its more aggressive peers, we think that the consistent approach is a positive.

The fund remained a consistent top-quartile performer between 2011 and 2014. However, the fund's year-over-year performance slipped to the third quartile in 2015, second quartile in 2016, and third quartile on a year-to-date basis as of September 2017.

The fund’s expense ratio is significantly higher than the Morningstar Category, with the fund being one of the most expensive in its category. Further, the success of the strategy depends on Agarwal's ability to manage duration and invest in the right credits.

Morningstar Analyst Rating™
Analyst Rating
Portfolio Role

The fund typically holds a higher allocation towards high-quality corporate bonds.

People

We have a positive opinion on the manager and the leadership at the AMC.

Parent

UTI has a strong backing from T.Rowe Price, but certain aspects could be improved in our opinion.

Process

A well-defined and consistent approach that has yielded positive long-term returns.

Performance

The fund has consistently delivered in the past, but has faced some headwinds in the short term.

Price

The fund’s expense ratio is higher as compared with its category.

Important Disclosures

Unless stated otherwise, this report was prepared by the person(s) noted in their capacity as Manager Research Analysts (i.e., fund analysts) employed by Morningstar, Inc., or one of its affiliates. It has not been made available to the issuer prior to publication.

Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Manager Research Analysts’ expectations about future events and therefore involve unknown risks and uncertainties that may cause such expectations not to occur or to differ significantly from what was expected. Analyst Ratings are not guarantees nor should they be viewed as an assessment of a fund’s or the fund’s underlying securities’ creditworthiness.

No material interests are held by Morningstar or the Manager Research Analyst in the financial products that are the subject of the research reports or the product issuer. Regarding Morningstar’s conflicts of interest: 1) Manager Research Analysts’ compensation is derived from Morningstar’s overall earnings and consists of salary, bonus and in some cases restricted stock; however, Manager Research Analysts are neither allowed to participate directly or try to influence Morningstar’s investment management group’s business arrangements nor allow employees from the investment management group to participate or influence the analysis or opinion prepared by them. Further information on Morningstar’s Code of Ethics policies is available from http://corporate.morningstar.com/us/asp/subject.aspx?xmlfile=540.xml

Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information contained herein is not represented or warranted to be accurate, correct, complete, or timely. This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution is prohibited without written permission.

For Recipients in India: Research on securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (“Investment Research”) is prepared by Morningstar Investment Adviser India Private Limited, which is registered with the Securities and Exchange Board of India. Your access to the Investment Research does not establish an advisory relationship with Morningstar Investment Adviser India. You should seek the advice of a financial professional before making an investment decision to ensure, among other things, that the security is suitable based on your particular needs and circumstances.

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