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Conservative investors looking for a less volatile fund can consider limited exposure to units of UTI Mastershare. The fund delivered eight and five per cent over 3 and 5-year periods and bettered its benchmark BSE 100 by four and three percentage points, respectively.
Suitability
Although the fund has a long track record and has been very consistent in declaring dividends its performance cannot be termed top notch. The fund is a good diversifier for conservative investors looking to sweep some profits through reasonable regular dividend pay outs. For more aggressive investors, funds like UTI Opportunities from the same stable would be a better fit.
In the past ten years the fund declared dividend mostly in September -November period, perhaps around the time when equity markets typically start to pick up. This strategy may cap the opportunities and hamper return.
But it does provide comfort to investors by declaring dividends even in a down market like 2008.
The fund's dividend payout style makes it more suitable for dividend seekers. Alternatively, more informed investors can opt for the growth scheme and avail the appreciation trigger (as a percentage of your capital) offered by the fund house, to book profits during rallies. This can enhance return by not fixing a time period to take out dividends.
Performance
The fund's low volatility is a big plus for those who cannot handle ups and downs. The fund's beta (measure of volatility) is lower than its benchmark. The fund still managed to outperform the benchmark across market cycles. The lower portfolio turnover of the fund implies that it follows a buy and hold strategy.
Over the last year, due to market volatility, fund's NAV corrected by 7 per cent. Although, it bettered its benchmark by a few percentage points, it trailed its peers such as Canara Robeco Large Cap Plus and ICICI Pru Top 100 by 6 percentage points. The under performance may be partly due to its increased exposure to banking stocks in recent months.
The fund's SIP return reflects that its large-cap holding has contained volatility well. For instance, since SIP inception (from 2004), it delivered a compounded annual return of 10.2 per cent against the 8.9-percent clocked by its benchmark.
Portfolio overview
The fund has 46 stocks in its portfolio and the top ten accounted for 49 per cent of the assets. The fund appears to consistently prefer sectors such as financial services, energy and IT. These together accounted for 49 per cent of the assets.
Among the stocks, large caps accounted for 87 per cent of the portfolio. The currently attractive valuations of key large-cap indices suggest that large-cap stocks have room to deliver superior returns in a rally.
Despite the strong rally in consumer non durables, the fund continued to reduce exposure to this space.
The fund has traditionally stayed fully invested across market cycles. This may help participate in any ensuing rally.
The fund, when compared with its benchmark, is overweight on stocks such as SBI, Bharat Electronics, Sun Pharma and underweight on Hindustan Unilever Reliance Industries and HDFC.
The fund is managed by Ms Swati Kulkarni.
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