A mandate to invest only in stocks falling in the top 100 in terms of market capitalisation makes UTI Top 100 a safer fund compared with schemes focussed on the broader markets. In the present choppy markets, large-cap stocks are a better bet, given the stability in their earnings.

The fund was formed by a merger of UTI Select Index and UTI Master Share with a change in mandate to invest in large-cap stocks. It has bettered its benchmark by a wide margin during times of falling markets.

But of late, performance has slipped owing to high holdings in stocks such as Infosys, Titan Industries and Ambuja Cements which have had a bearish run.

The fund failed to match its benchmark’s returns during the 2009-10 market boom too, having been slow to deploy its cash holdings. Investors can retain holdings in the fund but keep a watch on performance.

Performance

Over the longer three-year time frame, the fund has eked out an annualised 7 per cent return, two percentage points higher than its benchmark BSE100.

Over a one-year period, the fund has fallen slightly behind its benchmark with a 24 per cent return, due to its sliding performance in the past three months.

On a daily rolling return basis over the past four years, the fund has beaten the BSE 100 about 62 per cent of the time. This lower figure can be attributed to a poor run in 2009-10. But during the market slide in 2011, the fund lost 19 per cent even as the BSE 100 tanked 28 per cent. With performance picking up from 2011, the fund has been more consistent in bettering market.

Portfolio

The fund maintains a compact portfolio of 25-35 stocks with the top ten making up about half the portfolio. Performance has been slipping from November last year, with high holdings in poorly-performing stocks such as Grasim Industries, Ambuja Cements and Titan Industries. The fund has reduced holdings in underperformers, but only by a bit.

Banking and finance has always been the top sector held by the fund with stocks such as ICICI Bank, HDFC and HDFC Bank serving to boost portfolio performance. The fund has prudently switched between other sectors.

For much of 2011, for instance, the oil and gas sector held a lot of weight in the portfolio with companies such as GAIL, Indraprastha Gas and Petronet LNG. This exposure was cut in 2012 when the sector began to slide.

Similarly, the fund added cement stocks in a timely fashion in mid-2012. FMCG stocks, picked up towards end-2011, have also done well. Exposure to sectors such as steel was gradually cut to nil by September last year.

Of late, the fund has added to its automobile exposure through Maruti Suzuki and M&M, and entered the infrastructure space by adding Adani Ports and Larsen & Toubro.

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