The Hindu Business Line : UTI Retirement Benefit Pension Fund: Hold

UTI Retirement Benefit Pension Fund is an open-ended balanced fund with a maximum allocation of 40 per cent to equity and the rest in debt instruments. The fund outpaced its benchmark and category average over three- and five-year periods. A higher allocation to debt makes it ideally suitable for conservative investors.

The fund’s equity portion failed to justify the returns during the long bull-run. Since the market is entering more uncertain times, if the tax benefit is not a major consideration, investors can consider UTI Mahila Fund, an exclusive women’s fund; for other investors, Templeton Pension Fund may be a better alternative.

Features: The objective of the scheme is to provide pension to investors, particularly self-employed persons, after they reach the age of 58, in the form of periodical cash-flow, based on the repurchase value of their holding, through a systematic withdrawal plan.

Withdrawal can be monthly, quarterly, half-yearly and annual. An exit load of 5 per cent for repurchase within one year and 1 per cent for above three years and nil at maturity. Investment into this fund is eligible for tax benefit under Section 80C.

Performance: UTI Retirement Benefit Pension Fund has generated a return of one per cent and trailed the benchmark Crisil MIP Blended Index and category average over the same time-frame by 2.0 and 0.5 percentage points respectively, over a one-year period. The fund’s passive investment approach to the equity portion during the recent correction partially explains its underperformance.

Over a longer time-frame of five years, the fund generated a return of 14 per cent and outpaced the benchmark by 7 percentage points. However, during the same period, UTI Mahila, which has a similar mandate to invest up to 70 per cent of the assets in debt, has scored four percentage points higher than Retirement Benefit Fund.

Portfolio Overview: The fund, over the years, has been investing 60-70 per cent of the assets in debt. In the latest portfolio, it has invested close to 35 per cent of the assets in equity, the top ten stocks forming part of large-cap stocks account for 60 per cent of the assets. The fund’s sector preferences were financial services, technology and energy, which together account for one-third of the assets. As of June, 60 per cent of the assets were invested in AAA-rated instruments with an average maturity of 3.5 years. Based on the market dynamic, the fund shuffled its average maturity period and, over the past two years, earned close to eight per cent through this route.

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