UTI Bond Fund is an open ended income (debt) scheme known for its relatively low volatility and conservative positioning.
Biren Shah
UTI Bond Fund is an open ended income (debt) scheme known for its relatively low volatility and conservative positioning. Typically, investors with medium term investing horizons have fared well with this scheme. It is managed by Amandeep Chopra.
Launched in May 1998, the scheme has grown at a compounded annualised growth rate (CAGR) of 9.12% since inception. It has been a consistent performer and has comfortably beaten its benchmark (Crisil Composite Bond Fund Index) and peers in the selected time frame. Over a period of one year it has returned 6.99% while its benchmark and peers yielded 5.67% and 6.29%, respectively. The expense ratio of the scheme is 1.40% as on September, 2007 and is lower than the category average of 1.45%.
UTI Bond Fund invests in rated corporate debt papers and government securities with relatively low risk and easy liquidity. It is mandated to invest up to 100% of its assets in debt and money market instruments.
As per its latest disclosed portfolio, the scheme has apportioned 60.03% of its assets in debt instruments and the rest in cash and equivalent.
The fund has drastically reduced its exposure in corporate bond instruments, from 64.21% to 36.39%. The opposite picture can be observed in commercial papers, where the exposure has been increased to 16.17% from 2.81% since September 2006.
The majority of its portfolio comprises of good quality rated papers — 61% of the portfolio is invested in AAA-rated papers and 19% in sovereign instruments. It has also invested around 10% in instruments with a rating profile of less than AAA. The average maturity of the portfolio as on September 2007 is 1912 days.
The majority of its portfolio comprises of good quality rated papers — 61% of the portfolio is invested in AAA-rated papers and 19% in sovereign instruments.
It has also invested around 10% in instruments with a rating profile of less than AAA. The average maturity of the portfolio as on September 2007 is 1912 days and is on the higher side of the category.
Assets under management of Unit Trust of India’s Bond Fund have witnessed have fallen by 6.17% in the last year figure. The corpus stands at Rs 315.68 crore as on September 2007. The drop is attributed to the constantly rising equity market and the underdeveloped nature of the domestic bond market.
UTI Bond Fund has low volatility in returns compared to its peers. The fund has invested in securities having medium-term duration, helping minimise volatility If interest rates fall in the days to come, and debt funds come back in fashion, this fund will be one of the funds to watch out for.
By arrangement with mutualfundsindia.com, a unit of Icra Online
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