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During turbulent times in the market such as the one currently prevailing, funds with a proven track record of curtailing the downside would be appropriate bets.
Investors with a moderate risk appetite can consider buying units of UTI Opportunities Fund. With a large-cap slant, the fund is well-suited for investors who seek downside protection in a volatile market, with reasonable participation during rallies.
Sector choices work
The fund’s ability to time the market and quickly raise cash levels has helped it contain erosion in NAVs better. In the past, the scheme has been successful in outperforming the benchmark during a market downturn. For instance, during the period January 2008-February 2009, when the BSE 100 lost almost 60 per cent, the fund managed to arrest the decline at 51 per cent. The fund held over 30 per cent of its assets in cash and debt when the markets hit a new bottom in early March 2009. In addition to holding a significant portion of its assets in cash, the fund has also been prudent in reducing exposure to underperforming themes such as energy, financials, IT and telecom. Similarly, increasing exposure to defensive sectors such as consumer goods and healthcare also powered the fund’s performance.
Likewise, during the recovery phase between March 2009 and November 2010, the fund clocked returns higher than the benchmark. It gained 158 per cent during this period compared to 132 per cent gain for the benchmark. Higher allocation to sectors such as metals, auto, consumer goods and power helped the fund outpace the benchmark. This is despite holding 13 per cent of its assets on average in cash and cash equivalents during this period.
The fund has consistently beaten its category average returns over one-, three- and five-year periods. It has also managed to clock returns higher than the category average over these periods.
On a one-year basis, the fund delivered 11.1 per cent gains, compared to 12.6 per cent gain for BSE100. Trimming exposure in FMCG biggie ITC, refining major Reliance Industries, ONGC and HDFC impacted fund performance.
On a three-year basis, the fund raked gains higher than the benchmark by nearly 6 percentage points. Similarly, on a five-year basis, the fund delivered returns higher than the benchmark by 8 percentage points.
The fund held 42 stocks in its portfolio at the end of April 2013. With a weighted average market capitalisation of over Rs 96,000 crore, over 84 per cent of its assets was invested in large-cap stocks. Interestingly, the fund has invested nearly 11 per cent of its assets in cement and related products. It also has higher allocation to pharma even while being underweight in core sectors such as financials, energy, IT and automobile.
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