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Sunday, Oct 31, 2004

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UTI Mastergrowth: Hold

Suresh Krishnamurthy

INVESTORS in UTI Mastergrowth can stay with the fund. Its performance over the past five years has been consistent, and its diversified profile and PSU focus has made for steady returns.

The fund declares dividends consistently. If dividends were declared in years in which stock prices have not appreciated investors would need to reinvest dividends to build more wealth.

Those who do not have exposures in the scheme can consider fresh investments, though in smaller lots. Exposures can be enhanced after monitoring the performance over the next few years. There is an entry load of 2.25 per cent for investments below Rs 25 lakh.

Performance: UTI Mastergrowth outperformed the Nifty and the BSE 200 in 2002, 2003 and so far in 2004. In terms of annual returns, its performance has, however, not been exceptional. There are many other equity funds whose net asset value per unit has appreciated much more.

In terms of consistency, however, UTI Mastergrowth's performance stands out. Its risk profile has either matched that of Nifty while delivering returns or is better than that of the BSE-200 with consistent returns.

It has outperformed BSE-200 in 27 of the 45 months between January 2001 and September 2004. When the market goes down, Mastergrowth either outperforms BSE-200 or underperforms by a smaller measure. In terms of fluctuation in returns, UTI Mastergrowth's was closer to that of Nifty.

Portfolio allocation: Given the growth in assets of other equity funds, UTI Mastergrowth has now become one of the medium-sized funds with assets under management of about Rs 277 crore. It had a cash position of about 16 per cent as at the end of September 2004.

Its portfolio sported a diversified profile. Investments in all the 46 stocks in the portfolio were less than five per cent of net assets. The top ten stocks accounted for about 33 per cent of net assets.

In terms of industry sectors, the petroleum sector topped the list with an allocation of 23 per cent.

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