The Hindu Business Line : UTI Equity Fund

UTI Equity Fund is the new avatar of erstwhile UTI Master Gain. The fund’s NAV dropped by 14 per cent in the past six months while the benchmark BSE 100 has shed 20 per cent. During the same period, the fund’s assets under management dropped by 10 per cent.

The fund has a well-diversified portfolio of 73 stocks. It has taken concentrated exposure to top stocks, with the top ten accounting for 39 per cent of the assets. As part of diversification, the fund invested 19 per cent of its assets in 41 stocks. We take a look how the fund shuffled its portfolio over a six-month period ended April 2008.

Status quo in auto

The fund pruned exposure to banking, auto, cement, IT, media, power, telecom and textiles. As a defensive strategy, it allotted one-fifth of the assets to consumer goods. It also increased asset allocation to capital goods and refineries. While the last quarter of 2007 saw the fund holding very little cash, the scenario was different in the first quarter of 2008, with cash holding raised to 13 per cent of assets.

Secular run in banking space may be viewed with caution as holdings in Axis Bank, HDFC Bank, ICICI Bank and ING Vysya Bank were trimmed over the past quarter. The fund moved out of Andhra Bank and Kotak Mahindra Bank completely. It appears bullish on select stocks such as State Bank of India, Canara Bank, Oriental Bank of Commerce and Union Bank of India, which it accumulated during the past quarter. Shares of LIC Housing Finance were also gradually added in the past four months.

The fund preferred to maintain status quo in the auto sector despite decline in sales numbers and higher interest rates. Holdings in Mahindra and Mahindra, Tata Motors, Bajaj Holdings, Maruti Suzuki and Bharat Forge were retained without change.

The cement space underwent a minor rejig. The fund trimmed holdings in India Cements and accumulated shares of ACC. The fund also shed weight in frontline IT stocks — Infosys Technologies, Satyam Computer Services and Tata Consultancy Services. With the sharp run-up in power stocks, it pruned allocation to the sector.

Notable stocks to move out of the portfolio include Suzlon Energy, Tata Power and NTPC. In the consumer goods space, the fund reduced exposure to Nestle and Glaxo Smithkline Consumer Products and instead added Hindustan Unilever afresh.

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