In markets as iffy as the one we see now, it makes sense to buy funds with a focus on safety and a proven track record. UTI Equity fits the bill well.

Large-cap stocks that dominate its portfolio (83 per cent currently) give the fund stability in volatile times. It has contained downsides effectively, losing far less than the benchmark (S&P BSE 100) during the market reversals of 2009, 2011 and 2013. Even in the current volatile phase since January, the fund has gained marginally in contrast to the fall in the benchmark. This ability will be handy if market nervousness increases.

That said, UTI Equity has also delivered stellar returns when the going was good — more than 26 per cent last year and nearly 16 per cent annualised in the past five years. Over one to five-year periods, the fund has beaten its benchmark by large margins — 6 to 13 percentage points. On a daily rolling returns basis, the fund has done better than the benchmark more than nine times out of 10 in the past five years, marking out its consistent outperformance. Among large-cap peers, UTI Equity shares the high table of top performers.

Deft choices

Adroit stock selection has stood the fund in good stead. For instance, its large-cap picks, such as Eicher Motors and Torrent Pharma, have doubled or more the past year. The dash of mid- and small-cap stocks in the portfolio (10-15 per cent) also provides a kicker to returns — stocks such as SML Isuzu and SRF more than doubled last year.

Timely exit from losers, such as NTPC, has also helped. Over longer periods, picks such as Britannia Industries, Ceat and Eicher Motors have turned out to be multi-baggers.

UTI Equity has also rotated its sector allocations well. Over the past year, raising exposure to autos and auto ancillaries helped it benefit from the cyclical recovery in the sector. Paring stakes in software companies which are facing growth challenges and swapping some public sector banks for private sector ones were also good moves. Currently, private sector banks, which have managed to do well even in tough economic conditions, form the major chunk of the fund’s equity portfolio.

The fund generally maintains equity exposure in its portfolio at 95-99 per cent, with the allocation moving to the lower end when markets turn choppy. In such situations, it increases exposure to cash rather than debt, which forms a minimal portion of the portfolio. The fund is nimble-footed and quick to reverse from cash to equity when it perceives the tide to be turning.

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