MUMBAI:
UTI Overnight Fund primarily invests in overnight securities viz. Triparty Repo Dealing and Settlement (“TREPs”), market repo & securities having a maturity of one business day.
Amit Sharma, Fund Manager, Debt, UTI AMC said, “In any debt funds there are two types of risks viz. credit risk and duration (interest rate) risk. Credit risk arises from the underlying instruments in which portfolio invests in. UTI Overnight Fund invests in TREPs and reverse repo, where counter party is Clearing Corporation of India Limited, therefore the probability of default is very low.
Also, this fund invests in securities which matures in 1 day hence the interest rate risk is minimized. Thus the credit risk and interest rate risk in UTI Overnight Fund is negligible. This fund can be looked at as an emergency fund wherein one can build the required corpus gradually. A risk averse investor may also park one’s surplus funds in this scheme as the withdrawals from this schemes generally get processed in one business day”.
