A consistent outperformer
UTI Equity Fund has featured in the top 30 percentile of CRISIL Mutual Fund Ranking (CMFR) during the past eight quarters ending March 2020. Ajay Tyagi has been managing the fund since January 2016; he has been associated with UTI AMC since 2000. Assets under management (AUM) of the scheme increased over 1.75 times from ~5,163 crore in June 2017 to ~9,057 crore in May 2020.
The scheme's investment objective is to generate long-term capital appreciation by investing predominantly in equity and equityrelated securities of companies across market capitalisation.
Trailing returns
The fund has consistently outperformed the benchmark (Nifty 500 TRI) and its peers (funds ranked under the multi-cap funds category in March 2020 CMFR) in all the trailing periods under analysis. An investment of ~10,000 in the fund on August 1, 2005, (inception of the growth plan) would have grown to ~64,222 on July 2, 2020, at an annualised rate of 13.27 per cent, compared with the category and the benchmark, which would have grown to ~60,076 (12.76 per cent per annum) and ~50,952 (11.52 per cent per annum), respectively.
Systematic investment plan (SIP) is a disciplined mode of investing offered by mutual funds through which one can invest a certain amount at regular intervals. A monthly investment of ~10,000 in the fund for one and three years would have yielded a positive return vis-à-vis the benchmark’s negative return. A monthly investment of ~10,000 in the fund for 10 years, totalling ~12 lakh, would have grown to ~19.99 lakh (10 per cent annualised returns), as against ~18.27 lakh (8.26 per cent annualised returns) in the benchmark, as on July 2, 2020.
Portfolio analysis
The fund was previously positioned as a large-cap fund with maximum allocation to large-cap stocks — 85.16 per cent during the past three years. Post Sebi’s re-categorisation, the fund’s allocation to large-cap stocks averaged at 60.26 per cent, while its allocation to mid-caps was 28.26 per cent and small-caps was 9.17 per cent. The fund has stuck to its mandate of i nvesting across market capitalisation with a tilt towards large-cap stocks.
The portfolio was diversified across 21 sectors in the past three years. Banks had the highest average allocation of 20.39 per cent, followed by software (15.05 per cent), finance (10.95 per cent), pharmaceuticals (10.72 per cent), and consumer nondurables (8.86 per cent).
In the past three years, the fund took exposure to 76 stocks, of which it held 31 stocks consistently. Among the consistently held stocks, Info Edge, Divi's Laboratories, and Jubilant Foodworks were major contributors to the funds’ performance. Other key contributors included Ipca Laboratories and Nestle India. top gainers are part of the bottom 35. During the June quarter, all the Nifty 50 components, but four posted gains. Market players said most stocks making positive contribution is a healthy sign for the market. However, the trend needs to get relatively pronounced. The broad-based Nifty Midcap 100 continues to remain polarised. The index gained 26 per cent during the June quarter. Its top 15 components rallied 41 per cent, while the bottom 85 gained an average 28 per cent.