UTI Equity Fund - Wait And You Can Win

- By ANOOP BHASKAR
What should be the yardstick for selecting a fund in the current volatile situation? One should select a diversified scheme which has restricted the losses in last year’s market fall and has a good long-term track record. 

UTI Equity – earlier known as UTI Mastergain Unit Scheme - is one such scheme that has a decent track record and has managed well to contain the losses during the market fall since January 2008. The adage slow and steady wins the race has been proved right by this fund.

Launched in 1992, the fund primarily has a multi-cap approach with mini-mum allocation of 70 per cent towards the large-cap stocks and allocation of up to 20 per cent and 10 per cent in the mid-cap and small-cap stocks respectively. The fund had a well-diversified portfolio of 74 stocks in December 2008. The top ten stocks contributed almost 33 per cent of the total equity portfolio, while the portfolio turnover has been on the lower side. This suggests that the fund manager is largely following a buy-and-hold strategy on the stocks. 

Looking at the current volatility, the fund seems to be cautious as it is currently holding cash and debt of more than 20 per cent that is more than its stipulated allocation strategy. And the fund manager wants to main-tain such cash levels till the general elections. However, if the market tests its previous lows, then significant portion of cash might be deployed before elections.

The top three sectors for this fund were banks, FMCG and automobiles as these sectors are domestic consump-tion-driven. Such sectoral call as well as cash calls by the fund makes this portfolio fairly defensive. However, the fund manager proposes to be more value-specific or stock-centric over a sector-centric stock selection approach. Talking on the changes in the investment strategy, the fund manager says, “We are focusing on valuations, sustainabil-ity of earnings and regularly monitoring risk/reward equa-tion for the top 100 stocks.”

This fund is managed by Anoop Bhaskar since April 2007 after which it has done well as compared to its peers. At UTI, Anoop also manages funds like Transportation and Logistics, Master Value, India Lifestyle and Mid-cap. Out of the total five funds managed by Anoop, three have managed to outperform the category returns. In the three year and one year period, this fund has managed to give minus 3.64 per cent and minus 40 per cent returns respectively. The category returns stood at minus 5.64 per cent and minus 50.56 per cent respectively. 

Looking at the funds defensive approach towards asset allocation, the fund might do well to restrain the losses in the bearish period. However, in the bull-run the fund might not be able to outperform its peers with aggressive allocation. Thus risk-averse investors can invest in this fund through SIP.