DSIJ's Fund of the Fortnight - UTI Dividend Yield Fund
Dividend yield funds invest primarily in stocks with a high dividend yield and companies with better cash flows. These funds tend to be less volatile, and generally manage to restrict losses during market downturns. Here is one such consistently-performing dividend yield fund – the UTI Dividend Yield Fund. It is an open-ended equity scheme, and its investment mandate demands the allocation of at least 65% of the portfolio in equity shares that have a high dividend yield at the time of investment.
The fund is being managed by Swati Kulkarni since its inception in 2005. Biased towards Large-Caps, with around 70%-75% of the portfolio invested in Large-Cap stocks, it has done well so far. With 54 stocks in its portfolio, the fund is fairly diversified, and the top 5 holdings account for 24%. The fund remains invested around 90% of the time. In terms of performance, it has outperformed its category as well as the benchmark across all the time periods. Since inception, the fund has generated a CAGR of 17.81%.
The fund underperformed its benchmark as well as the category average in 2006, but in 2007, it outperformed its benchmark by more than 10% and delivered a return of 70.56%. In the bear market of 2008, the fund showed resilience towards the downside and fell by only 44.44%, as compared to a decline of 55.28% shown by the benchmark. Overall, dividend yield funds can provide good returns in the long term, while exhibiting lower risk in comparison to other diversified equity funds. As the fund is mandated to pick up good dividend yield stocks, this brings support on the downside. Investors with a conservative-to-moderate risk profile looking to invest in equities can pick this scrip.
Fact Sheet
AMC
UTI Asset Management Company Ltd
Category
Equity - Large & Mid-Cap
Investment Option
Growth & Dividend
Exit Load
1% for redemption within 364 days of allotment
Corpus
Rs 3439.2 crore (30/09/11)
52 Weeks' High/Low
Rs 34.32 (03/01/11) / Rs 28.68 (23/11/11)
Minimum Investment
Rs 5000
Benchmark
BSE 100
Launch Date
May 2005
Fund Manager/s
Swati Kulkarni
Trailing Returns (%) As On 09/12/2011
Time Frames
Fund
Category
Year-to-Date
-13.84
-19.31
1-Year
-9.39
-15.09
3-Year
28.11
21.35
5-Year
13.59
4.64
Returns up to 1 year are absolute and over 1 year are annualized