Like many large-cap-oriented funds, old warhorse UTI Mastershare too has stumbled over the past year, losing 3 per cent. Blame this on two factors.

In the volatile market since January this year, several large-cap stocks, particularly those in the commodity space, have ended up on the losing side. In contrast, many mid-cap stocks have held their heads above water.

So, the S&P BSE Sensex is down 10 per cent, the S&P BSE 100 has slipped 8 per cent while the S&P BSE Mid-cap index is still up 4 per cent.

Relative to peers, the share of large-caps in UTI Mastershare’s portfolio is on the higher side — across market cycles, they have formed 80 per cent or more of the fund’s portfolio. Currently, large-cap stocks (market capitalisation of ₹10,000 crore and more) make up nearly 85 per cent of the fund’s portfolio.

The short-term picture may not look pretty, but UTI Mastershare remains a good choice for conservative investors and those who seek regular dividends.

One, the 29-year old fund, a veteran of many market cycles, has delivered good returns in longer periods — about 14 per cent annualised over three years, 9 per cent over five years and 12.5 per cent over 10 years. These are not top-of-the-chart, and there are peers who have done better.

That said, when the market takes deep cuts like in 2009, 2011 and 2013, the fund’s bias towards large-caps helps it contain the downside very effectively.

Being overweight on large-caps may pay off at the current iffy market juncture, too. If the pain in the market worsens, large-caps may not suffer as much as mid- and small-caps. And a revival may see large-caps rally faster to make up for lost ground.

Good dividend record

UTI Mastershare ranks middle-of-the-road in its category, but the fund beats its benchmark BSE 100 fairly consistently, doing better during both market upsides and downsides.

On an annual rolling return basis, the fund has outperformed the benchmark nearly three-fourths of the time over the past five years, and almost always in the past year. Its one-, three- and five-year returns are higher than the benchmark’s by 3-5 percentage points. UTI Mastershare has an enviable record of declaring dividends without a break, even in tough years.

While the fund follows a growth-oriented strategy, a fairly diversified portfolio consisting of more than 50 stocks reduces risk. Good stock selection and well-timed moves have helped. Picks, such as MRF, Shree Cement, Asian Paints and Maruti Suzuki have tripled to quintupled over the past five years. Over the last year, the fund’s timely moves included adding up on Infosys, which is reviving well, and cutting down on Vedanta, which is getting hit by the commodity downturn. The few mid-caps in the portfolio are quality names, such as Indraprastha Gas and SKF India.

The fund remains invested mostly in equities (95 per cent and more of the portfolio). A mix of cyclical (banks and autos) and defensive (software and pharma) sectors form the top holdings.

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