106384  |  INF789F01AJ9  |  5 star  |  Neutral

NAV

$ 29.97

1-Day Total Return

0.02
%
INR | NAV as of 10/18/2017 9:30:00 AM | 1-Day Return as of 18 Oct 2017

TTM Yield

0.00%

Load

0.00

Total Assets

111.8 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

High/Limited
Author
Morningstar's Take | 02/12/2016
by Kavitha Krishnan

The portfolio manager’s skilled execution is reflected in the fund’s long-term performance. Despite this, the relatively high expenses on the fund, the lack of an experienced analyst team, and the high levels of individual responsibilities on the investment team lead us to initiate coverage on this fund with a Morningstar Analyst Rating of Neutral.

Sudhir Agrawal has been managing this fund since October 2012, and we view his skill and experience in positive light.  Our concerns stem from the relatively higher levels of individual responsibilities on the three-member investment team.  Agrawal has been managing few of the largest fund offerings by the AMC while Ritesh Nambiar doubles as fund manager and head of credit research. Amandeep Singh Chopra heads the fixed-income team and  his leadership capabilities stand out, but there is a key-man risk associated with him. The analyst team, too, seems slightly shorthanded, consisting of a three-member team including an economist. The trio put together have an average experience of about five years.

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. Agrawal takes a tactical exposure in government securities with a view to take advantage of interest-rate movements and maintain liquidity levels in the portfolio. The focus is on risk avoidance as opposed to generating purely top-quartile performance. Despite this conservative approach, the fund delivered a consistent and impressive performance until 2014.

The fund remained a consistent top-quartile performer between 2011 and 2014. However, the longer term three-year returns have taken a beating owing to the relative performance slipping down to third quartile in 2015 and second quartile on an October 2016 year-to-date basis.

The fund’s expense ratios are significantly higher than the short-term bond Morningstar Category, with the fund being one of the most expensive in its category. Furthermore, the success of the strategy depends on the manager’s ability to invest in the right credits and rests heavily on Agrawal’s able shoulders.

Morningstar Analyst Rating™
Analyst Rating
Portfolio Role

The fund holds a higher allocation to corporate bonds; allocation, however, can change significantly.

People

We have a positive opinion on Sudhir Agrawal, but are wary of the levels of responsibility on him.

Parent

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

Process

A well-defined process that translates into a consistent and stable portfolio.

Performance

A fund that 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

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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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