DSIJ Mindshare

UTI Equity Fund - On the top

- By ANOOP BHASKAR
Head – Equity, UTI Asset Management Company


Being one of the oldest players in the MF industry, this fund has played a marathon inning of over 18 years! In this period, like any cricketer, this fund has had its ups and downs, though it has come out to be a true winner, considering that it has managed to stay ahead of the rest on good pitches while it has also done an equally good job on the bad pitches. In 2008, when all the chips were down and out, this fund managed to handle the sub-prime debacle better than most of the funds in the industry. In fact, it was the third-best fund in restraining its investors’ losses and when large and mid-cap category returns fell by 52.49 per cent, this fund fell by 45.25 per cent.

This also turned out to be the turnaround year for this fund’s performance wherein it has outperformed its category in CY09 and CY10 and managed to overcome the underperformance of CY07 and CY06. The fund manager, Anoop Bhaskar, took over the fund’s management post-April 2007, and from that point onwards it has never looked back and managed to be ahead of its category on a consistent basis. At UTI, Anoop also manages eight equity funds from which four funds are co-managed by the other fund manager. And out of these eight funds, only two funds have underperformed their categories in the long run.

The fund has rewarded its long-term investors well considering that in such a long career of 18 years it has managed to give prudent returns of 12.36 per cent CAGR since its inception. In the last three- and one-year period, the fund has managed to beat the category returns by over 752 and 402 bps. The fund doesn’t seem to be aggressively chasing returns, which is quite evident from the fund management’s style, portfolio, and the risk-return ratio. The fund has an impressive Sharpe Ratio (a measure that indicates how much return a fund has provided against every unit of the risk taken) of 0.22, which is the second-best in the category. It also boasts of a well-diversified portfolio of 79 stocks wherein its top ten stocks contributed just 37 per cent of the portfolio.

However, the fund is almost fully invested in equities and holds a mere 5 per cent of the net assets in debt. Further, the fund’s market-cap allocation is largely (almost 80 per cent) tilted towards a more stable genre of stocks, i.e. the large-cap stocks. Close to 20 per cent of its assets are invested in defensive sectors such as healthcare and FMCG. Such a portfolio augurs well for the moderate risk investors who are willing to park a larger part of their investments in equities through SIP.

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