UTI Equity may be called a late bloomer, especially given that its performance became more conspicuous only after its rechristening in July 2005 (from its erstwhile name of UTI Mastergain). The fund has had a highly consistent track record since, with a 10-year compounded annual return of 16.3 per cent – a good 3 percentage points than its competitive benchmark index – S&P BSE 100.
That means your money would have been 4.5 times your investment in a decade, and that’s a good record to showcase.
The Fund and Suitability
UTI Equity could be called a diversified equity fund with a large-cap bias. Close to three fifths of its assets are in stocks with a market cap of over Rs. 12,000 crore. That means this fund is not a pure large-cap fund. It will provide you a large-cap focus with adequate participation in mid-cap stocks. To this extent, you can expect some amount of volatility in this fund.
UTI Opportunities, another fund from this stable, has a much higher large-cap focus (87 per cent), and is also less volatile (measured in terms of standard deviation). It is therefore important for you to know that the risk profile and return potential of UTI Equity will be a notch or two higher than UTI Opportunities.
In other words, if your risk appetite is limited, you should prefer UTI Opportunities over UTI Equity. UTI Equity would be closer to funds such as BNP Paribas Equity and Axis Equity in terms of the average market cap of stocks.
UTI Equity will fit any long-term equity portfolio, and curtails the need for investors to separately go overboard on mid-cap stocks, given its mid-cap participation.
On a point-to-point return basis, UTI Equity may not score over the peers mentioned above. However, the fund’s rolling return performance, rolled daily over 3-year periods in the last 5 years, reveals that it beat its benchmark, BSE 100, at all times. Outperformers such as BNP Paribas Equity – did not actually manage this feat. Added to this, the fund beat the category average of its peers (segregated based on market cap) 100 per cent of the times for a similar rolling-return period.
Also, interestingly, while the S&P BSE 100 had generated negative 3-year returns 9 per cent of the times over the last 5 years, the fund did not have a single instance of negative return. This is not to say that this fund will never generate negative returns; after all a year like 2008 can easily ruin that record!
Despite higher deviation from its mean compared with its sister fund, UTI Opportunities, UTI Equity makes a mark on a risk-adjusted return basis, suggesting that the higher risks it took paid off thus far.
An SIP in this fund 5 years ago would have delivered a good 19 per cent Internal Rate of Return (IRR), as opposed to 12 per cent in its benchmark, S&P BSE 100.
Portfolio
UTI Equity had a very large basket of 78 stocks as of September 2015, and is generally known to hold a very diversified basket. Banking and financial services continues to be the top held sector in the fund, although it is significantly underweight in this sector when compared with its benchmark.
Compared with a year ago, automobile replaced IT as the second top sector to be held. In the automobile space, popular stocks such as Maruti Suzuki and Hero Motorcorp were supplemented with less trendy mid and small cap stocks such as Tube Investments and SML Isuzu, albeit with limited exposure.
The now customary candidates – Maruti Suzuki, Eicher Motors, Lupin and IndusInd Bank were the popular wealth builders for this fund over the past 1 year. IT stocks such as Infosys and TCS, as well as engineering conglomerate, Larsen & Toubro, were the return draggers over the past year.
The fund is managed by Anoop Bhaskar, who also manages UTI Opportunities.
FundsIndia’s Research team has, to the best of its ability, taken into account various factors – both quantitative measures and qualitative assessments, in an unbiased manner, while choosing the fund(s) mentioned above. However, they carry unknown risks and uncertainties linked to broad markets, as well as analysts’ expectations about future events. They should not, therefore, be the sole basis of investment decisions. To know how to read our weekly fund reviews, please click here.
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I agree with your analysis.
Hi, UTI equity funds are always good but i was looking for tax saving mutual funds which can save tax and give high returns, any recommendation?
Hello Neha, Please write to us through yoru FundsIndia account and our advisory team will get back to you. We are constrained from offering invstor specific advice on the blog. thanks, Vidya
Great review.
I have one question although, i am an investor in large cap funds, as adviced by you, for long term financial planning but my question is:
I was going through the 5 and 10 year retuns of mid and multicap funds, they have also been consistent although with higher SD. But they have delivered 2-5% better returns than the large cap funds. So why should they be considered only as 10-20% of entire portfolio and not as the major portion of the portfolio. because if goal is 15 years away and i am not a very aggressive investor than also going by the returns over 10 years of time , does if not make better investment sense to invest in mid and multicaps than in large caps as they will also deliver better returns over the large frame of time.
Very nice Analysis. How about Axis ELSS MF? m looking to invest in for 80C.
Hello Deepika, Sorry for the delayed response. Axis LT Equity is a tax-saving fund and a good option. Vidya
Vidya, very nice article from Fundsindia. I already invested in UTI equity, Axis MF (ELSS) and HDFC Top 100, can u recommended me any other good MF with good return?
Deepa, thanks. We are constrained from making any investor-specific recommendations on the blog. If you are a FundsIndia investor, please use your account to write to us and we will respond. thanks, Vidya
Vidhya, i am looking for tax saving mutual fund, can you please tell me which are some good mutual fund i can invest in?
Nisha, Thank you for writing to us. Please refer our blog for our suggestions on tax-saving funds. I am constrained from making individual recommendations on the blog. If you are an investor, please write to us through your account. Thanks, Vidya
Vidhya, i am looking for tax saving mutual fund, can you please tell me which are some good mutual fund i can invest in?
Nisha, Thank you for writing to us. Please refer our blog for our suggestions on tax-saving funds. I am constrained from making individual recommendations on the blog. If you are an investor, please write to us through your account. Thanks, Vidya
Very nice Analysis. How about Axis ELSS MF? m looking to invest in for 80C.
Hello Deepika, Sorry for the delayed response. Axis LT Equity is a tax-saving fund and a good option. Vidya
Hi, UTI equity funds are always good but i was looking for tax saving mutual funds which can save tax and give high returns, any recommendation?
Hello Neha, Please write to us through yoru FundsIndia account and our advisory team will get back to you. We are constrained from offering invstor specific advice on the blog. thanks, Vidya
Vidya, very nice article from Fundsindia. I already invested in UTI equity, Axis MF (ELSS) and HDFC Top 100, can u recommended me any other good MF with good return?
Deepa, thanks. We are constrained from making any investor-specific recommendations on the blog. If you are a FundsIndia investor, please use your account to write to us and we will respond. thanks, Vidya
Great review.
I have one question although, i am an investor in large cap funds, as adviced by you, for long term financial planning but my question is:
I was going through the 5 and 10 year retuns of mid and multicap funds, they have also been consistent although with higher SD. But they have delivered 2-5% better returns than the large cap funds. So why should they be considered only as 10-20% of entire portfolio and not as the major portion of the portfolio. because if goal is 15 years away and i am not a very aggressive investor than also going by the returns over 10 years of time , does if not make better investment sense to invest in mid and multicaps than in large caps as they will also deliver better returns over the large frame of time.
I agree with your analysis.