UTI Money Market Fund is conservative by nature but bold in returns

UTI Money Market Fund, launched in April 1997, has consistently ranked in the top 30th percentile of the money market fund category in the CRISIL Mutual Fund Ranking (CMFR) for three consecutive quarters through March 2024.

The fund’s month-end assets under management increased to Rs 11,680 crore in March 2024 from Rs 6,800 crore in March 2021.

The investment objective of the fund is to generate reasonable income with a high level of liquidity through a portfolio predominantly invested in money market instruments.

Amit Sharma and Anurag Mittal have managed the fund since July 2017 and December 2021, respectively.

Trailing returns

The fund has outperformed the benchmark (CRISIL Money Market A-I Index) and its peers (funds ranked in the money market fund category in March 2024 CMFR) over one-, two-, three-, five-, seven-, and 10-year trailing periods.

To illustrate, Rs 10,000 invested in the fund on July 9, 2009 (the inception of the regular plan of the fund) would have grown to Rs 28,556, reflecting an annualised rate of 7.26 per cent. In contrast, the same investment in the category and benchmark would have grown to Rs 27,964 (7.11 per cent) and Rs 27,721 (7.04 per cent), respectively.

Duration management

Over the past 12 months, as yields on government securities (G-secs) increased, the fund adjusted its modified duration from 0.53 years in June 2023 to 0.62 years in May 2024. The modified duration for the money market fund category increased from 0.51 years to 0.58 years.

Portfolio analysis

The fund has maintained a predominant allocation to money market securities (certificates of deposit and commercial paper), averaging 81.72 per cent over the past 12 months.

Allocation to G-secs averaged 3.73 per cent, while exposure to cash and equivalents averaged 1.48 per cent over the same period.

The fund has maintained a conservative credit profile, with predominant allocations to the highest-rated securities (AAA and A1+) and sovereign securities.

Exposure to AAA and A1+ rated securities averaged 81.72 per cent over the period.

Compared to its category peers, the fund maintained a lower allocation to sovereign securities, averaging 16.34 per cent compared to the category’s 19.16 per cent.

The fund had no exposure to securities rated below AAA and A1+ over the past 12 months.