‘UTI Treasury Advantage Fund’ launched by Unit Trust of India (UTI) follows an accrual-oriented strategy. It invests in a well-diversified portfolio of debt and money market instruments with an aim to generate reasonable income with lower volatility over the short-term. The fund primarily invests in commercial papers, certificate of deposits and low duration corporate bonds along with tactical exposure to government securities, according to UTI sources.
A UTI spokesperson mentioned that in the recent monetary policy announcement, MPC gave a state based guidance rather than a time based guidance by mentioning to maintain accommodative stance as long as necessary to sustain growth on a durable basis. This indicates that RBI is not willing to commit itself to any fix timelines for continuation of accommodation due to uncertain economic outlook, the spokesperson added. The Governor also announced the G-sec acquisition programme (G-SAP) wherein RBI would make open market purchases of G-sec of Rs1 lakh crore in Q1FY2021-22. This likely to support and stabilize long term yields. Further, the Governor announced introduction of Variable Rate Reverse Repo (VRRR) auctions of longer maturity this is an extension towards normalising liquidity in the system.
The UTI spokesperson said, “Going ahead, we expect the yield curve to flatten from the current levels where yields at the longer end of the curve would compress faster than shorter end. Even though there is flattening bias, we expect the recovery to be slow and the liquidity is likely to be in surplus mode in the near term, which would help support the yields at the shorter end.In such a scenario, UTI Treasury Advantage Fund provides a good investment opportunity to park for short horizon of 6 to 12 months.”