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Union Mutual Fund has launched Union Short Duration Fund, an open-ended short-term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 1 year to 3 years.
Debt funds including short duration funds offer accrual as well as mark-to-market gains when interest rates decline.
Anindya Sarkar and Shrenuj Parekh will co-manage the fund.
Parijat Agrawal, Head- Fixed income of Union AMC said “As liquidity conditions improve, we can anticipate a compression in these spreads. Additionally, the credit environment remains favourable. The leverage ratio (debt to equity ratio) for Indian corporations is on a downward trajectory and the credit rating ratio—reflecting the number of upgrades versus downgrades—stood at 2.75 times (Source: Crisil Ratings) for the first half of FY25, which is above the long-term average.”
Madhu Nair, CEO, Union AMC said, “Short-term spreads are attractive at their current elevated levels, and there is an expectation for them to normalize going ahead. We believe that an anticipated supportive monetary policy and expectation of easing liquidity conditions can make short-duration funds attractive for investors.”
