Financial Daily from THE HINDU group of publications
Sunday, Sep 22, 2002

Investment World
Port Info

Group Sites

Investment World - Mutual Funds
Markets - Mutual Funds

UTI Petro Fund: Hold

Suresh Krishnamurthy

INVESTORS in UTI Petro Fund can stay invested. The fund's NAV has declined sharply in the wake of the Government's decision to put off disinvestments in the oil-refining sector. Stocks such as BPCL and HPCL, the fund's mainstays, dipped more than 30 per cent in this period.

However, the valuation of the stocks in this sector has now become attractive after the sharp fall in price. In this backdrop, it may be better to hold on to the holdings.

Fresh investment in the fund may, however, be avoided right now. Further negative developments on the disinvestment front could lead to another bout of selling in these stocks.

In this backdrop, fresh investments can be contemplated after the disinvestments outlook is clear. But if there is a further sharp fall in price of these stocks of 10-20 per cent from the present levels, investors can use the opportunity to invest in the fund.

Suitability: Sector funds are suitable only for a portfolio with a more than average risk profile. To maximise the return on sector funds, investors have to frequently trade on their holdings, depending on the price levels of stocks in the sector.

Without such active trading the return on an investment in a sector fund may not be commensurate with the risk involved over a longer period. On the other hand, the risk involved in an investment in the fund is enhanced by the need for active trading. In other words, this fund is not a suitable investment for first-time investors in the stock market or investors with a conservative risk profile.

Performance: The fund's performance since inception has been impressive. Since June 1999, the fund has delivered compounded annual returns of around 23 per cent. This is substantially higher than what market indices have delivered over the same period. In the last 12 months, the returns have been of the order of around 87 per cent.

This is despite the steep fall in the net asset value of around 14 per cent in the last 3 months.

Send this article to Friends by E-Mail

Stories in this Section
Evaluating mutual fund costs: Initial issue expenses

Zooming ahead with variants
Endgame in sight?
The sum of all fears
UTI Regular Income Scheme: Unattractive
Birla Mid-Cap Fund: Unattractive
Bonds for UTI investors
Sundaram Balanced Fund: Hold
Dhanavarsha (13): Set for premature redemption
UTI Petro Fund: Hold
UTI Index Select Equity Fund: Hold/Avoid fresh exposures
Bonds for MIP investors
K-30: Hold
Nedungadi's proposed merger with PNB: Not a credit-worthy proposition
Ballarpur Industries: Hold
Nifty companies: Struggling to stay ahead
NRB Bearings: Hold
Monsanto India: Hold
Atlas Copco: Capitalise on the rise
Bima Nivesh 2002 from LIC
Dreary outlook for key pivotals
Protecting the markets
Depressed sentiment
Pare exposure in Bajaj Auto
United Phosphorus, Zee move southward
Nasdaq: Weak undertone
Bonds: Upside limited
PSU petro stocks remain active
Why puts are costlier than calls?
Exercising option and selling
Options guide
Futures guide
Canbank Factors: Bank on it
`HMT's brand is Titan's lure'
Rebates: Avenues to reduce tax
Tax payments without PAN/TAN
SEBI's amended Takeover Code: Levelling the playing field?
Some landmark takeover cases
S&P's wake-up call
Cracking the Nifty mould too often
Attention CRB depositors
It Adds Up!

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |

Copyright 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line