UTI Regular Savings Fund: Conservative on risk, superior on return

The fund was launched in December 2003 as UTI-MIS Advantage Plan. Subsequent to the re-categorisation of mutual fund (MF) schemes by the Securities and Exchange Board of India (Sebi), it was renamed UTI Regular Savings Fund in May this year. The fund has featured in the top 30 percentile in the conservative hybrid funds category of CRISIL Mutual Fund Rankings (CMFR) for the two quarters ended June 2018.

Amandeep S Chopra, the CIO- fixed income at UTI AMC, and Ajay Tyagi manage the debt and equity components of the portfolio, respectively. They have been managing the fund since September 2009 and December 2014, respectively. The fund’s investment objective is to invest predominantly in debt and money market instruments and part of the portfolio into equity and equity-related securities, with a view to generating income and aim for capital appreciation. Its quarterly average assets under management for the quarter ended June 2018 was Rs21.07 billion.

Consistent performance

The fund has consistently outperformed its benchmark (CRISIL Hybrid 75+25 - Conservative Index) and peers (funds ranked under the conservative hybrid category in CMFR - June 2018) across all trailing periods under analysis. 

A sum of Rs10,000 invested in the fund since inception would have grown toRs40,703 (10.05 per cent CAGR) on August 8, 2018, compared with Rs36,016 (9.14 per cent CAGR) for the peer group and Rs36,212 (9.18 per cent CAGR) for the benchmark.

Systematic investment plan (SIP) is a disciplined mode of regular investments offered by MFs to investors. A monthly SIP of Rs10,000 over 10 years (an investment of Rs1.2 million) would have grown to Rs2.02 million, earning 10.21 per cent per annum as on August 8, 2018. A similar investment in the benchmark would have grown to Rs1.97 million at 9.71 per cent per annum.

Portfolio analysis

The fund invested predominantly in debt securities in the past three years. The portfolio’s debt and money market component constituted 75.95 per cent, on average, with the remaining allocation to equities (24.18 per cent on average) and cash equivalents. The debt portfolio was predominantly composed of corporate bonds and government securities (G-secs) during this period. Corporate bonds had allocation of 40 per cent, on average, while allocation to G-secs averaged 27.26 per cent.

The fund has been conservative in managing the credit risk exposure of the portfolio during the three years. The corporate debt component was largely allocated to AAA and A1+ rated securities, averaging 23.35 per cent of the portfolio. Allocation to the AA category and A1 rated instruments averaged 16.96 per cent. Exposure to A+/A2+ and below rated securities ranged from 0 to 1.86 per cent during the period under analysis. 

CRISIL Research