The Hindu Business Line : UTI Mahila Unit Scheme: Invest

Women investors looking for a debt-oriented scheme can consider UTI Mahila Unit Scheme. The fund has outperformed its benchmark consistently over a five-year period and has also outperformed other funds in the category by a substantial margin. A higher allocation to debt makes it suitable for a conservative investor.

Features: The scheme is open to women above 18 years of age. It has no entry load, but an exit load of 0.5 per cent will be levied for investments less than Rs 10 lakh or a holding period of less than 180 days. There is no exit load for repurchases beyond three years. The expense ratio is somewhat high, at 2.25 per cent. The minimum investment is Rs 1,000. The fund cannot invest more than 30 per cent in equities.

Performance: UTI Mahila Unit has been the star performer consistently among debt-oriented schemes. Despite its conservative allocation to equity, the fund has outperformed its peers by a considerable margin. Over a five-year period, the fund delivered 20 per cent, against the category average of 17 per cent. Over a one-year period, UTI Mahila returned 38 per cent compared to 12 per cent, on an average, for the category. The fund has, however, under-performed in the last three months. That can be explained by the substantial cash holdings in its portfolio post-May, when the market crashed. By June end, it was 20 per cent in cash.

Investment style: The fund appears to follow a conservative approach, as suggested by its cash holdings. It liquidated a substantial part of its equity portfolio post-May and by August the cash holding increased to 31 per cent of its portfolio. This strategy could have helped it book profits on a good part of its equity portfolio and also explains the solid performance over a six-month period. On the flip side, it also missed out on the interim rally between June and August, when the Sensex and the Nifty regained almost their entire losses.

The fund has been heavy on auto ancillary stocks for a very long time. Ucal Fuel and Rane Madras have figured in the portfolio for almost two years. In April 2006, the fund reduced exposure to mid-caps and enhanced stake in large-caps such as Infosys and Reliance. This has helped prune losses subsequently. As for its debt investments, it parks a majority of its funds in high-yielding company bonds — mostly Triple-A rated — and the rest in G-Secs, to which it has increased exposure over the last six months.

As of August end, it had close to 31 per cent of its assets in cash, 17 per cent in G-Secs and only 6 per cent in equity. Very few securities in its portfolio are traded.

The fund has been following a buy-and-hold approach as far as bonds are concerned and hence, its bond portfolio has not been affected much by the falling rates over the last two years. The high cash component could help it lock into higher yields in the bond market and enter a more stable equity market.

Fund Facts: The fund was launched in April 2001. Its net assets were Rs 81.95 crore as of end-August. It is benchmarked against the Crisil MIP balanced index. Siddharth Dembi is the fund manager.

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