UTI Corporate Bond Fund opened for subscription on 23rd July and will close on 6th August. The Fund will invest 80-100% of its assets in corporate bonds rated AA+ and above. The balance 0-20% will be invested in other types of bonds or money market instruments. The fund is open-ended and will reopen for subscription on 9th August 2018.
The scheme will be benchmarked to the Crisil Corporate Bond Composite Index. This index had a Yield-to-Maturity of 8.90% as of 1st June 2018. Yield to maturity gives you an idea of the return a fund will fetch if its securities are held till maturity. This only gives you a rough idea of the return in open-ended funds like this one because a fund can buy and sell bonds at any time. There is no convention of holding them to maturity.
Corporate Bond funds are affected by both credit and interest rate movements. It is the latter that have taken a toll of these funds in the recent past. Bond prices fall when interest rates rise. The average category return over the past year is just 3.88% as per Value Research Data. However this need not be the case if interest remain flat or fall in the coming 12 months.
Sudhir Agarwal and Sunny Patil who manage various other UTI debt funds will be the fund managers of this fund.
NFO Period: 23rd July to 6th August
Fund Managers: Sudhir Agarwal and Sunny Patil
Minimum Investment: Rs 5,000
Options: Growth, Dividend Payout and Dividend Reinvestment