UTI Mastershare completes three decades of building wealth

NS Vageesh Mumbai | Updated on January 16, 2018


Delivers 15% CAGR over 30 years; dividend in excess of ₹2,400 cr disbursed since inception

Rupees 10 lakh invested 30 years ago at the inception of UTI Mastershare Unit Scheme would have yielded ₹6.98 crore today. It is an exciting moment for investors and the fund alike as the fund crosses a new milestone, completing 30 years. Being the first-of-its-kind large-cap diversified equity fund, it has delivered commendable returns across the long-time frame — across three-four bear and bull phases over the past three decades. The fund is proud of its performance and offers a testimony to the kind of wealth creation that is possible if you stay invested for the long term.

AUM at ₹3,500 crore

Swati Kulkarni, the fund manager of the scheme, a respected veteran in the field and by coincidence one who has stayed invested for thirty years in the scheme, points out that the fund has provided over ₹2,400 crore as dividend alone since inception.

She has managed the fund for the last 10 years. The fund’s assets under management (AUM) has grown at a CAGR of 15 per cent and is now around ₹3,500 crore.

Swati advises investors that it is important to focus on asset allocation principles rather than worry about whether another fund or scheme has given 1 or 2 per cent higher return. A large portion of the average Indian household’s investments still lie in fixed deposits and savings accounts — which is neither tax efficient nor useful to beat inflation over a long period of time.

‘MFs are best bet’

Swati concedes that in the short term there are phases when equity may appear to underperform relative to other asset classes. But as she points out, if you look at a conservatively managed fund, such as Mastershare, which has grown at a 15 per cent CAGR since inception, then you realise the potential in equities in the long term. She highlights the importance of an institutionalised approach to investing, based on proper planning and research — and therefore recommends mutual funds for everyone.

Asked about how they pick companies for investing, she said, that as a house, UTI has preferred to look at companies with good operating cash flows, sustenance of those flows and return on capital employed. These parameters are very important besides management quality, corporate governance, management bandwidth and other such attributes.

Putting the cash flows to good use is the recipe for a sustainable growth model. Individual investors may not be able to look into that detail or even if they know, they may not have the time. That’s where a research team helps, she points out. Sometimes the investment rationale may take time to fructify — given that companies encounter hurdles from different quarters. But if the investment thesis is right, and if you track it continuously, and if your investment is process driven and remain style-pure without jumping at every temptation, then that will deliver good returns, she said.

Prudential limits

Swati adds that there are prudential limits such as having a cap of 7.5 per cent per stock and 30 per cent per sector which are monitored by an independent risk department. These checks and balances ensure that all viewpoints are reflected and one fund manager’s biases and thought process don’t dominate the fund, she said.

Published on October 19, 2016

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