The returns chart of UTI Opportunities has not been very inspiring lately. In the past year, the large-cap stalwart has lost 6.3 per cent, even as peers such as SBI Bluechip, Kotak Select Focus, and BNP Paribas Equity managed positive returns. Keeping company with the worst performers in the one-year period, UTI Opportunities seems to have lost its way.
But UTI Opportunities’ long-term track record gives it solid backing. Against its benchmark, BSE 100, the fund has steadily kept ahead – in the past five years, it has bested the BSE 100 all of the time on a three-year rolling return basis. On the same metric, it has done better nearly 9 out of every 10 times against its category.
In all market cycles in the past seven years, returns put up by UTI Opportunities have been better than the BSE 100. What more? On a risk-adjusted basis, UTI Opportunities delivers much better than most of its peers. It also scores on its low volatility, measured by standard deviation.
In light of all this, UTI Opportunities remains a good option for investors with a moderate risk appetite, and a three to five year horizon.
Intact record
The fund takes predominantly large-cap bets (stocks with market capitalisation of over Rs 12,000 crore), to the tune of 85-90 per cent of its portfolio. This prevents it from getting ahead of peers such as UTI Equity, SBI Bluechip, or BNP Paribas Equity, which take a higher level of mid-cap exposure. In the market correction that has been in place since March this year, large-cap stocks have had steeper falls than mid-cap stocks.
Given the strong long-term track record of UTI Opportunities, a year’s underperformance relative to peer funds can be accorded some leeway. The fund’s returns across the one, three, and five year time-frames are also above the BSE 100 index.
Portfolio make-up
A few calls did hurt UTI Opportunities. For instance, it remained underweight on the banking space compared to its benchmark, given the trouble clouding the sector, besides rightly tilting towards private sector banks. But, holding around 7 per cent of the portfolio in the underperforming ICICI Bank hampered performance. Franklin India Bluechip, another true-blue large-cap fund, instead chose IndusInd Bank which was a better performer by far.
Similarly, while Franklin India Bluechip’s portfolio featured Dr Reddy’s Labs in its top holdings, UTI Opportunities chose Sun Pharmaceuticals. Dr Reddy’s Labs has only recently slipped, and remained a better performer than Sun Pharma for much of the past year. Reliance Industries is another stock that features in the top holdings of UTI Opportunities, but has not notched up a market-beating performance. The slip-sliding TCS similarly weighed on returns.
Calls that did propel the fund’s returns include Infosys, HDFC Bank, Axis Bank, Shree Cement, UltraTech Cement, and MRF, among others. The fund does not churn its holdings frequently either, and tends to pick stocks that are not very pricey.
Its current portfolio holds it in good stead, with a balanced distribution between consumer-driven sectors such as automobile and select ancillaries, cheaper private sector banks, and consumer goods, defensive pharmaceuticals, and cyclical sectors that will take off first, such as cement.
The fund size is a high Rs. 5,210 crore and is managed by Anoop Bhaskar.
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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Wealth Conversations – December 2024
Are Arbitrage Funds right for you?- Introduction Of Daily, Weekly Frequency In Sip And Changes In Default Sip Date And Minimum Investment Amount For The Groww Mutual Funds
How do you feel about the following funds if someone has a horizon of 30 years in SIP. Appreciate your guidance.
HDFC 200
HDFC Equity
SBI emerging Businesses
IPRU TAX ELSS
IPRU Value Discovery
Hi Samriddhi,
Apologies for the delay in reply. Your time horizon is excellent for equity funds to deliver. The funds you invest in depends on your risk appetite and goal, as well as existing mutual fund investments so it won’t be appropriate to provide specific fund recommendations here. If you are a FundsIndia investor, please make an appointment with our advisors for you to get detailed and tailored advice.
Overall, the two ICICI funds hold good track records of consistent performance, although the ELSS fund can be a bit volatile. The two HDFC funds have good track records over the long term, but have not done well in the recent past as they have gone against the tide. The SBI fund has higher volatility compared to its category and lower risk-adjusted returns. It is also not very consistent in the long term, against its category.
Thanks,
Bhavana
How do you feel about the following funds if someone has a horizon of 30 years in SIP. Appreciate your guidance.
HDFC 200
HDFC Equity
SBI emerging Businesses
IPRU TAX ELSS
IPRU Value Discovery
Hi Samriddhi,
Apologies for the delay in reply. Your time horizon is excellent for equity funds to deliver. The funds you invest in depends on your risk appetite and goal, as well as existing mutual fund investments so it won’t be appropriate to provide specific fund recommendations here. If you are a FundsIndia investor, please make an appointment with our advisors for you to get detailed and tailored advice.
Overall, the two ICICI funds hold good track records of consistent performance, although the ELSS fund can be a bit volatile. The two HDFC funds have good track records over the long term, but have not done well in the recent past as they have gone against the tide. The SBI fund has higher volatility compared to its category and lower risk-adjusted returns. It is also not very consistent in the long term, against its category.
Thanks,
Bhavana
I am invested in HDFC Equity + Top 200 for 3 years in SIP. Its performance has been downgraded by most research companies. I have a horizon of 30 years. do I ever need to worry or continue sipping.
Any better alternative to SBI emerging
thanks
Samriddhi, the 2 funds you mentioned are middle order funds and as a long term investor, it should be ok to hold them. For more queries, if you are a FundsIndia inevstor, please write to us through your account (advisor appointment feature in your help tab). The blog is not an advisory forum. thanks, Vidya
I am invested in HDFC Equity + Top 200 for 3 years in SIP. Its performance has been downgraded by most research companies. I have a horizon of 30 years. do I ever need to worry or continue sipping.
Any better alternative to SBI emerging
thanks
Samriddhi, the 2 funds you mentioned are middle order funds and as a long term investor, it should be ok to hold them. For more queries, if you are a FundsIndia inevstor, please write to us through your account (advisor appointment feature in your help tab). The blog is not an advisory forum. thanks, Vidya