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Fund Analysis: UTI Transportation and Logistics Fund
Thu, Dec 10, 2015
Source : Jeni Shukla, Citrus Interactive

UTI Transportation and Logistics Fund is a sectoral open ended equity fund. Its investment objective is “capital appreciation” through investments in stocks of the companies engaged in the transportation and logistics sector. It is the only fund in the mutual fund industry which is focused on this particular sector. The fund was initially launched as the UTI Auto sector Fund as part of the UTI Thematic sector Funds Umbrella in Marc 2004. The name was later changed to UTI Transportation and Logistics Fund. The current Assets under Management (AUM) is Rs. 627 crore . The fund size has more than doubled in the last year from a size of Rs. 300 crore in October 2014.

 

Performance

UTI Transportation and Logistics Fund has an outstanding performance track record of consistently outperforming the benchmark index across time periods as shown from the table given below. It is worth noting that it gave a CAGR return of 20.64% since inception.

Scheme Name

YTD

6 Months

1 Year

2 Years

3 Years

Since Inception

UTI Transportation & Logistics Fund(G)

5.48

3.95

12.24

59.19

42.21

20.64

S&P BSE AUTO Index

-2.49

-0.92

-2.22

22.69

20.81

 

Returns as of 31st October, 2015; Figures above 1 year in CAGR terms

 

Portfolio Characteristics

Sector concentration: The fund concentration in the Top 3, Top 5 and Top 10 sub sectors is as given in the table below.  These are Auto Ancillaries, 2 Wheelers and Passenger cars.

 

Top 3

Top 5

Top 10

UTI Transportation & Logistics Fund(G)

38.23

56.4

80.81

 

Company concentration: The company concentration of the fund in the Top 3, Top 5 and Top 10 companies is as given in the table below.

 

Top 3

Top 5

Top 10

UTI Transportation & Logistics Fund(G)

23.74

33.68

51.34

 

Number of equity holdings: The fund currently holds 40 stocks in its portfolio (as on October 31, 2015). It is a reasonably diversified portfolio compared to other sector funds.

The top 5 holdings in the portfolio are Hero MotoCorp, Maruti Suzuki India , Tata Motors, Bosch and Wabco India. In the last six months the fund has bought Minda Corporation, Greaves Cotton and sold JK Tyre & Industries, Amtek Auto, Gujarat Pipavav Port and SML Isuzu.

In the last one year that fund has aggressively reduced the exposure to Trucks and Light Commercial Vehicles from 12% to 8% and Tyres from 13% to 6%. In the same period it has added Logistics stocks to the portfolio. It has reduced weight in large cap forging stocks while adding weight in mid cap casting stocks. Weights in 2 wheelers and Ports have been pruned while that in Batteries has been increased.

The portfolio turnover ratio is 34%.

 

Process

Transportation and Logistics Fund invests in stocks engaged in the following areas:- Companies principally engaged in providing transportation services, companies principally engaged in the design, manufacture, distribution or sale of transportation equipment and companies in the logistics sector. At least 80% of the portfolio has to be invested in stocks which fulfill the above criteria. A maximum of 10% is allowed to be invested in cash and money market instruments. The investment universe comprises sectors/sub-sectors including Auto/auto ancillary, Railway, Ports, Airports, Roads, Shipping, Courier, Logistics and other ancillary sectors catering to Transportation & Logistics.

The fund is benchmarked against the UTI Transportation and Logistics Index. It is determined, composed and calculated by IISL - India Index Services & Products Limited.

Risk factors specific to the fund as highlighted by UTI:

(i) The automobile sector is vulnerable to the domestic as well as the world economy. Events such as recession, war, monsoon, political upturn, etc. in India as well as in the export markets may adversely affect the companies.

Taxes and other levies imposed by the GoI on the acquisition and ownership of vehicles as well as increase in fuel prices may have an adverse effect on the demand.

(ii) Excessive competition from domestic as well as international players will have a significant bearing on the sector. Price variations in the key input materials of auto components may affect profitability to that extent.

(iii) The companies are subject to risks arising from exchange rate fluctuations. Changes in emission norms affect the costs and hence profitability of auto companies.

 

Fund Managers

Anoop Bhaskar is a B.Com graduate from Delhi University and a MBA in Finance from SIBM, Pune.

He has 23 years of work experience in equity research and fund management, of which 19 years are with asset management companies. Prior to joining UTI AMC, Mr. Bhaskar has worked with Sundaram Asset Management, Chennai as Head-Equity, Templeton Asset Management as Senior Research Analyst, Shriram Financial Services Ltd. as Manager-Investments, Brisk Financial Services and Cross Borders Finance & Project. Mr. Bhaskar has assumed the role of Head- Equity at UTI AMC since April, 2007. Other funds managed by him include UTI Equity, UTI Midcap, UTI Opportunities, UTI Children’s Career Balanced and UTI Focussed Equity Series I and II.

Daylynn Pinto co-manages the fund. He is a senior research analyst with UTI AMC with 4 years of experience.

 

View

UTI Transportation and Logistics Fund is a high risk fund. It is the only fund in this segment and has an excellent track record. The fund manager has a strong record and the portfolio is fairly diversified.  It is suitable for aggressive investors for allocation to auto and logistics sector.  We feel that Auto and Logistics sector will do well in 2016 also and those investor who are willing to take high risk for high return can go for this fund. However, the exposure to a sector fund should not exceed 105 of the overall equity portfolio.

 
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