Fitch Ratings has today affirmed UTI Floating RateFund's (Short Term Plan) National rating at 'AAA(ind)'. Therating reflects the fund's highest standards for credit quality,its conservative investment approach, well established riskmanagement processes and management controls, relative to otherliquid funds in India. The agency has considered the fund's investment policies,management capabilities, risk management procedures andsupporting controls in ensuring consistency with management'sobjectives. As of 30 November 2008, 96% of the portfolio was invested inassets rated 'F1+(ind)'/'AAA(ind)' or equivalent. The securitywith the lowest rating in the portfolio has a rating of'AA+(ind)' or equivalent. Fitch notes that the portfolio management team intends tomaintain the fund's credit quality when choosing new investments.However, the poor liquidity of lower rated securities in theIndian debt market may put the portfolio credit quality understress, should assets held in the portfolio be downgraded. The fund faces concentration risk as at end-November 2008;68% of the fund's assets were invested with debt securities ofjust three issuers, but all three issuers have the highest creditrating and their debt securities are relatively liquid, hencepartially mitigating this concentration risk. The investment manager of the mutual fund is UTI AssetManagement Company Pvt. Ltd. The sponsors of the mutual fund areState Bank of India, Punjab National Bank, Bank of Baroda andLife Insurance Corporation of India. Fitch's National fund credit ratings are assigned on a scaleof 'AAA(ind)' to 'C(ind)', on a rating scale similar to that ofFitch's National Long-term credit ratings, with 'AAA(ind)'indicating the highest credit quality standards within thecountry. The assigned rating provides a relative measure of the fund'screditworthiness only in comparison with other funds in India asit is a National rating. It is therefore not internationallycomparable. Fitch's bond fund credit rating do not consider the effect ofmarket risk on net asset value ("NAV") movements, and are not anindication of the stability of the fund's NAV. Such issues areassessed in Fitch's bond fund volatility ratings.
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