With an aim to generate reasonable income with lower volatility over the short-term, UTI Treasury Advantage Fund follows an accrual-oriented strategy by investing in a well-diversified portfolio of debt and money market instruments. UTI Treasury Advantage 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.
It may be mentioned here that in the recent monetary policy announcement (as was widely expected), the MPC voted unanimously to continue accommodative stance and to maintain the repo rate at 4.00%. The Governor also announced the third tranche of G-SAP which would constitute purchase of SDLs as well. Inclusion of SDLs in future G-SAPs may put a cap on SDL spreads. Further, the Governor also announced to conduct G-SAP 2.0 in Q2FY22 of Rs 1.20 lakh-crore which was broadly in line with market expectations. This coupled with possible OMOs announcements, would provide support the yields at the longer end of the curve.
Explaining the situation, UTI sources said that there were no announcements on any tightening or withdrawal in near term on the liquidity front. The recovery is likely to be dependent on pace of vaccination as well as unlocking of the economy and the liquidity is likely to be in surplus mode in the near term, which would support the yields at the shorter end. In a scenario where the system is likely to be in surplus mode and the mark-to-market volatility being comparatively low, UTI Treasury Advantage Fund provides a good investment opportunity to park for short horizon of 6 to 12 months, UTI sources added.