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Large Cap defensive pick
Tue, Feb 04, 2014
Source : Jeni Shukla, Citrus Interactive

UTI Opportunities Fund(G) is a large cap-oriented fund with assets under management worth Rs. 3,643 crore (as on Dec 31, 2013). The Inception Date of fund is 20th July 2005 and is benchmarked against S&P BSE 100.

 

Performance

The fund has outperformed its benchmark as well as the equity diversified category average in the last three- and five-year periods. Since its inception the fund has delivered an impressive 15.45 per cent compounded annual growth rate which is superior to its benchmark performance in the same period. In the last one-year the underperformance vis-à-vis its benchmark is marginal. However, its performance is superior to the category average in the last one year.

 

Year-to-Date

1 YEAR

3 YEARS

5 YEARS

SINCE INCEPTION

UTI Opportunities Fund



-3.22

2.66

7.62

22.03

14.98

S&P BSE 100


-4.04

-0.34

3.03

16.9

12.1

Category Average



-3.89

0.21

4.18

19.1

NA

Rank

47/149

51/147

21/138

34/125

 

Figures in % as on Jan 31, 2014; Returns above 1-year in CAGR (Compounded Annual Growth Rate) terms

The fund has beaten its benchmark and the category average in all the last five calendar years except in 2012. In 2012 the fund also lost out because the rally was led by mid-caps and the fund maintains low exposure to mid caps. The fund has earned the reputation of falling lesser compared to its peer equity diversified funds in falling markets like the one seen in 2011.

 

2009

2010

2011

2012

2013

UTI Opportunities Fund

94.58

19.4

-12.11

27.28

5.2

S&P BSE 100

80.3

15.66

-25.73

29.96

4.93

Category Average

83.88

19.34

-24.3

34.38

3.71

Rank

39/126

60/133

2/133

113/143

64/147

Figures in %

Risk. In terms of measures of risk such as standard deviation and beta (measured over last three years), the fund has taken lower risk compared to the category.

 

Standard Deviation

Beta

UTI Opportunities Fund

0.9232

0.7972

Category Median

0.9649

0.8051


Risk-adjusted Returns. In terms of measures of risk such as Treynor ratio and Sharpe ratio (measured over last three years) the fund has delivered higher return for risks undertaken in the portfolio vis-à-vis its category median.

 

Treynor Ratio

Sharpe Ratio

UTI Opportunities Fund

0.0077

0.0187

Category Median

-0.0037

0.0107



Processes

UTI Opportunities is a large-cap oriented equity fund. The focus of the scheme is to capitalize on opportunities arising in the market by responding to the dynamically changing Indian economy by moving its investments amongst different sectors as prevailing trends change.

The investment processes at UTI gives autonomy to the fund manager to execute his investment strategy within the broad internal and regulatory guidelines. UTI has a Department of Securities Research which comprises analysts tracking various sectors. They provide regular inputs to the fund managers on stocks/industries, implications of RBI or Government policies and international markets. A separate primary market team conducts research on Initial Public Offerings (IPOs). The Head of Equity reviews the fund manager strategies on an ongoing basis.

The fund’s expense ratio is 2.18 per cent which is lower than the category median of 2.56 per cent. Like most equity diversified funds the fund has an exit load of 1 per cent on or before one year from the date of investment.

Portfolio

The fund portfolio comprises 46 stocks which is marginally higher than the equity diversified category median of 43 stocks. The fund has maintained an average holding of 45 stocks in 2013, 41 in 2012, 38 in 2011 and 39 in 2009 and 2010. Therefore, we find the fund holding a more diversified portfolio than it did in the past.

In the last five years the fund has had an average large cap exposure of 88 per cent. During this period the average mid cap exposure has been 7 per cent and exposure to small caps has been negligible. Its average exposure to cash has been 3 per cent. As on December 2013, the fund’s allocation to large caps and mid caps stands at 94 per cent and 4 per cent respectively. The average allocation to cash and cash equivalents in 2013 was 2.8 per cent.

As on December 31, 2013 the fund’s exposure to its top five sectors is 59 per cent compared to the category median of 58 per cent. These sectors are Software, Banks, Consumer non durables, Cement and Auto. Among banks, the fund has a higher exposure to private banks.

Of the 46 stocks in its portfolio, the fund held 32 in all of the last 12 months. The top five companies held by the fund form 30 per cent of the portfolio compared to the category median of 29 per cent. These companies are Infosys, ITC, Tata Consultancy Services, HDFC Bank and ICICI Bank. In June 2013 Tech Mahindra was added to the portfolio while HCL Technologies was added in August 2013. The fund had a significant holding of State Bank of India in the beginning of 2013, which it gradually brought down to nil by August 2013. Other stocks that the fund sold off in the last year are Petronet LNG, Kotak Mahindra Bank, HUL, BHEL and Glaxosmithkline Consumer Healthcare.

Over the last one year the fund’s exposure to cyclical stocks has ranged from 52 to 65 per cent, followed by defensives ranging from 15 to 19 per cent and Services between 13 and 26 per cent.  

Fund Manager

Since July 31 the fund has been managed by Anoop Bhaskar. He is also the Head of Equity at UTI Asset Management Company since April 2007. He has a sound track record and 23 years of work experience in equity research and fund management, of which 19 years are with asset management companies.  Other funds managed by him are UTI Equity Fund, UTI Mid Cap Fund, UTI Master Value Fund, UTI Energy Fund, UTI Transportation and Logistics Fund and UTI Children's Career Balanced Plan(Equity Portion). All five funds have beaten their category averages in the last three years. He refrains from making highly concentrated bets even on better performing stocks. One may find short-term underperformance during some market cycles but over longer time periods his funds tend to find their place in the top quartile.

View

UTI Opportunities Fund can be a good choice for investors who want a fund with a large cap bias to invest for the long term into Indian equities. It has managed to do well on a relative basis in volatile as well as falling markets. It may not be the best performing fund in a rally. Hence it is suitable for equity investors who want lower volatility. The fund’s performance can be attributed to the fund manager’s skills. Hence one needs to be cautious about changes at the helm.

 

 
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