UTI is one of the pioneers of the Indian Mutual Fund Industry. With a total AUM of Rs 15.56 Lakh crore, the AMC is among the most trusted names in the mutual fund space for 20 years now. The UTI Mutual Fund offers products across asset classes. Let us discuss about – UTI Corporate Bond Fund.
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About UTI Corporate Bond Fund
Investment Objective – The investment objective of the scheme is to generate optimal returns by investing predominantly in AAA/equivalent rated corporate bonds.
However, there can be no assurance that the investment objective of the scheme will be realized. The scheme does not guarantee/indicate any returns.
Investment Strategy
- A corporate bond debt fund focusing accrual-oriented income strategy.
- This fund intends to invest 100% portfolio in AAA/ equivalent assets.
- This fund has up to 72% allocation in higher credit quality corporate bonds.
Portfolio Composition
The portfolio comprises 93.89% allocation in debt, and the remaining 6.12% is held in cash and cash equivalents.
Top 5 Holdings for UTI Corporate Bond Fund
| Name | Instrument | Weightage % |
| GOI Sec 7.18 14/08/2033 | GOI Securities | 18.62 |
| LIC Housing Finance Ltd FD 7.67 15/04/2033 | Debenture | 4.93 |
| National Bank for Agriculture & Rural Development SR 24E Debenture 7.80 15/03/2027 | Debenture | 4.67 |
| Power Finance Corporation Ltd SR 223 Debenture 7.64 22/02/2033 | Debenture | 4.28 |
| Indian Railway Finance Corporation Ltd SR 173 Debenture 7.68 24/11/2026 | Debenture | 4.11 |
Source: Value Research
Performance Since Inception
| Period | UTI Corporate Bond Fund | Nifty Corporate Bond Index A-II (%) | CRISIL 10 Years Gilt Index (%) |
| 1 Year | 7.35 | 7.41 | 8.54 |
| 3 Years | 5.25 | 5.20 | 4.30 |
| 5 Years | 7.02 | 6.65 | 6.15 |
| Since Inception | 7.20 | 6.97 | 6.64 |
Source: utimf.com
Fund Manager
The fund is managed by Mr. Anurag Mittal, Deputy Head- Fixed Income and Fund. He is a CA from ICAI and holds a MSc from University of London. He has been managing the scheme since December, 2021.
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Why Invest in UTI Corporate Bond Fund?
- The scheme seeks to capture yield movements at the short to medium (1 to 5 years) segment of the curve, depending on the interest rate outlook and yield. Further, the current elevated real bond yields offer patient investors a favourable chance to earn decent accrual income and capital gains as the interest rate cycle shifts.
Who Should Invest in UTI Corporate Bond Fund?
This fund is suitable for Investors
- Who are seeking for reasonable income and liquidity over the medium term.
- New debt mutual fund investors who do not wish to take high levels of credit risk
- Those looking to diversify their fixed-income portfolio.
Ideal Time to Stay Invested
- Investors may consider this fund as a part of the core fixed income portfolio allocation for an investment horizon of 2 years and above.
Conclusion
UTI Corporate Bond fund is an open-ended debt scheme investing in highly rated debt instruments. The fund aims to generate reasonable income and capital appreciation by investing in high credit quality debt instruments. Currently, one to three-year corporate bonds stand a good chance of gaining from rate cuts, enhanced interbank liquidity and a decrease in corporate bond issuance during the first half of the fiscal year. Investors who are looking for an alternative to traditional instruments like FDs can consider this fund after studying risk metrics of the fund.
Disclaimer: This is not recommendation advice. All information in this blog is for educational purposes only.
