100741  |  INF789F01406  |  4 star  |  Neutral

NAV

$ 51.54

1-Day Total Return

-0.04
%
INR | NAV as of 23/06/2017 09:30:00 | 1-Day Return as of 23 Jun 2017

TTM Yield

0.00%

Load

None

Total Assets

18.4 bil

Expenses

1.67%

Fee Level

--

Turnover

1,157%

Status

Open

Min. Inv.

1,000

30-Day SEC Yield

--

Category

Intermediate Bond

Credit Quality/Interest Rate Sensitivity

High/Extensive
Author
Morningstar's Take | 28/12/2016
by Kavitha Krishnan

This fund is a good choice for investors who prefer consistency. The fund’s appeal hinges heavily on the experience of its lead manager and the team’s consistent application of the investment process.

Portfolio manager Amandeep Singh Chopra has over 22 years of experience with UTI and has worked across various functions within the AMC. He heads the fixed-income desk at UTI and has been managing this fund since 2012. Amandeep is supported by two portfolio managers with an average experience of around eight years at UTI. The analyst team consists of two credit analysts and an economist. While we have conviction on the manager and the expertise that he brings to the processes, we are wary of the lack of experience on the analyst team.

The investment approach is primarily driven based on a top-down macro approach wherein duration views are based on the interest-rate directional movements. Allocation towards gilts and corporate bonds are based on their relative spreads. The manager aims to invest in the most liquid corporate bonds and the most traded government-securities papers with a view to minimise portfolio risks.

The process includes risk-management procedures that dissuade managers from chasing momentum or taking aggressive duration calls. The internal risk team is involved at every stage of the process including the approval of new issuers and setting counterparty limits. While this approach could lead to a slowdown in the overall execution, we think that it has also helped the fund navigate trickier markets and post consistent returns across market cycles.

The success of the fund depends largely on the team’s ability to allocate between duration and credits and by the team’s ability to take the right macro calls and position itself across yield curves. These factors are reflected in the positive performance on the fund on a year-on-year basis. We think that strategy will continue to be run as is--with a neutral stance in terms of duration. While the investment team works well, the lack of an experienced analyst team and the key-person risk associated with Amandeep lead us to initiate coverage with a Morningstar Analyst Rating of Neutral on this strategy.

Morningstar Analyst Rating™
Analyst Rating
Portfolio Role

The fund invests in a combination of government securities and high-quality debt papers.

People

We are concerned about key-person risk.

Parent

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

Process

Led by an experienced manager who prefers consistent returns to taking aggressive duration bets.

Performance

A fund that has managed to post consistent returns across time periods under Amandeep’s lead.

Price

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

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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