UTI Money Market Fund: Conservative profile, consistent performance

Launched in April 1997, UTI Money Market Fund featured in the top 30 percentile of the money market funds category in CRISIL Mutual Fund Ranking (CMFR) for six quarters through December 2021.

The month-end assets under management of the fund stood at Rs 7,203 crore as of December 2021, up from Rs 2,573 crore in December 2018.

The fund’s investment objective is to generate reasonable income with high level of liquidity by investing in a portfolio of money market instruments.

Amit Sharma and Anurag Mittal have been managing the fund since October 2013 and July 2017, respectively.

Performance

The fund has consistently outperformed its peers (funds ranked under the money market category in CMFR in December 2021) over the trailing periods under analysis.

Rs 10,000 invested in the fund on July 9, 2009 (inception of the regular plan of the fund) would have increased to Rs 24,507 (7.37 per cent CAGR) on February 9, 2022, compared with Rs 24,036 (7.21 per cent CAGR) for the peer group.

Duration management

The fund reduced its modified duration from 0.47 years in March 2021 to 0.21 years in December 2021 to reduce interest rate risk exposure amid rising government security (G-sec) yields. Over the period, the peers reduced their modified duration from 0.51 years to 0.23 years.

Portfolio analysis

The fund has maintained predominant allocation to money market securities (certificates of deposit and commercial papers) in the past 12 months, averaging 60.30 per cent. Allocation to G-secs averaged 31.48 per cent, and exposure to cash and equivalents averaged 8.22 per cent over the period.

The fund has maintained a conservative credit profile in the past 12 months, with predominant allocations to the highest rated securities (AAA and A1+) and sovereign securities. Exposure to AAA and A1+ rated securities averaged 60.3 per cent during the period. The fund maintained higher allocation to sovereign securities compared with the category peers. The fund’s exposure to sovereign securities averaged 31.48 per cent compared with 27 per cent for the category. The fund did not take exposure to securities rated below AAA and A1+ in the past 12 months.