The Hindu Business Line : UTI Brand Value: Hold

Unitholders can retain their holdings in UTI Brand Value. The fund's performance has picked up since 2005, on the back of the boom in consumerism. Its diffused sector approach, however, makes it an inappropriate choice for those who wish to ride a particular theme.

The fund seeks to invest in stocks of companies with strong brands. FMCG stocks dominate the portfolio, although it includes other sectors such as cement, pharma, banking and software companies too.

The presence of a wider range of sectors, however, makes it neither comparable to pure FMCG sector plays nor to theme funds such as "Lifestyle" or "GenNext", which capitalise on the consumption story.

Instead, the portfolio resembles that of diversified funds such as DSP ML Opportunities or HDFC Equity, which tend to take concentrated sector exposures. Such funds have also outperformed UTI Brand Value over three and five-year periods.

The fund can form a small portion of your portfolio. Its carries a slightly higher risk profile than a typical diversified equity fund. With FMCG stocks accounting for a significant portion of assets, investors in the fund will have to closely monitor any developments in the sector. It may, however, have a lower risk profile than a pure FMCG fund.

Performance: After an unimpressive performance in 2003, when it under-performed the Sensex, returns began to pick up from 2004. In 2005, it further gained momentum. With the FMCG sector on the upswing, the fund has sped well ahead of the benchmark indices as well as the category average. It has nearly doubled its net asset value over one year.

With the presence of large-caps from other sectors such as L&T and Infosys, the fund has raced ahead of the likes of Birla Sun Life Buy India. Over a three-year period it has delivered a compound annual return of more than 70 per cent.

Portfolio overview: The fund has a small asset base of about Rs 80 crore comprising about 25 stocks. The FMCG sector accounts for about 25 per cent of the assets. Retail and pharmaceutical sectors are also prominent in the portfolio.

The fund invests predominantly in stocks with a market-capitalisation of more than Rs 2,000 crore. Grasim, Bharti Tele, i-flex Solutions and Andhra Bank are some of the offbeat stocks in its selection.

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