MF Query Board
Is it the right time to invest in UTI Transportation and Logistics Fund? - Shankar M.
UTI Transportation and Logistics Fund is a thematic fund focusing on the auto sector. Right now, it will not be a good idea to invest in UTI Transportation and Logistics Fund as the auto sector's performance looks bleak. It is reflected in the fund's performance, as it has not performed well as compared to its peers and is down by 19% in the last one year. Even when we look at its portfolio, it is not well diversified. It has a concentrated portfolio. It holds 37 stocks as of now and has 60 per cent of the assets invested in top 10 stocks of the portfolio and 42.72 per cent of the assets are invested in top 5 stocks. In terms of individual stock holdings, 15.87 per cent of the assets are invested solely in Maruti Suzuki India Ltd. So, investing in this fund would be a risky proposition. It would be advisable to look at investments in terms of asset classes and sub-asset classes, rather than solely making investment decisions based on funds. If you think thematic investment suits your risk appetite, then go ahead and invest in the some other thematic fund, provided you have a financial plan in place through which you have made provision for your future needs such as children's education, marriage, medical corpus, retirement, etc.. Hence, UTI Transportation and Logistics Fund is not a good bet in the current scenario.
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By periodically investing in an index fund, the know-nothing investors can actually outperform most investment professionals
Large-cap as an asset class is less riskier than mid-cap and small-cap. So, in a falling market, having a large-cap fund really helps to limit the fall of your overall portfolio. For a detailed analysis on large-cap, index funds and ETFs, kindly refer to our magazine issue dated May 27, 2019. Since your investment horizon is 20 to 25 years and you are ready to take market volatility, it shows you are an aggressive investor. Taking this into consideration, it is prudent to have a portfolio comprising of multi-cap, mid-cap and small-cap funds. Among these sub-asset classes allocate maximum funds to mid-caps and small-caps and the remaining to other asset classes. Investing in other asset classes would ensure that you limit your losses when the equity market is falling. Regarding HDFC Small Cap Fund, the fund's 1-year, 3-year and 5-year returns stand at -4.65 per cent, 18.31 per cent and 17.48 per cent, respectively. Indeed, it has not just outperformed its benchmark, but has outperformed its peers too. Especially in the falling market, it has performed better than its benchmark and category. From a long term perspective, HDFC Small Cap Fund can be a better bet.
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