- Editor Rating
- Rated 2 stars
- UTI Equity Fund
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The UTI Equity Fund is a large cap fund with a stated objective of investing at least 80 percent of its corpus in equity and equity related instruments which contain medium to high risk, and up to 20 percent in debt and money-market instruments with low to medium risk profile. Let us find out how the fund has fared, and if it makes sense to invest more, sell or keep the fund on hold.
Basic Information and Costs
The UTI Equity Fund was launched on May 18, 1992. It is benchmarked against S&P BSE 100. The riskometer deems the fund ‘moderately high’. The minimum investment needed for the fund is Rs. 5000 with a minimum SIP of Rs.500. The Assets Under Management (AUM) size is Rs. 5,284 crore with an expense ratio of 2.13 percent. There is an exit load of 1 percent for redemption within 364 days.
As on September 30, 2016, the equity component in the fund is 98.30 percent with debt being at 0.25 percent; and others at 1.45 percent. The top 5 sectors include Financial (30.40 percent), Healthcare (13.94 percent), Technology (10.46 percent), Automobile (9.86 percent) and FMCG (7.99 percent)
The top five holdings for UTI Equity Fund include HDFC Bank (6.95 percent), Infosys (5.23 percent), IndusInd Bank (5.13 percent), HDFC (5.10 percent) and Yes Bank (4.47 percent).
The UTI Equity Fund has returned 12.29 percent return per annum since launch. It has delivered 6.12 percent, 17.61, 15 percent and 12.82 percent return per annum in the past 1, 3, 5 and 10 years respectively. In the past year, the return has been exactly equal to that of S&P BSE 100 but in the previous years, it has managed to beat the benchmark. While the fund beat the category average in 3, 5 and 10 year period, UTI Equity Fund underperformed in the past year.
UTI Equity has performed below expectation, if you consider its performance with respect to its peers. Birla Sun Life Frontline Equity Fund has given 10.65 percent, 18.54 percent, 16.55 percent return per annum in the past 1, 3 and 5-year period. Kotak Classic Equity Fund has given 8.07 percent, 14.96 percent and 13.77 percent return per annum in 1, 3 and 5 years respectively. SBI Magnum Equity Fund has delivered 9.42 percent, 17.23 percent and 14.41 percent return per annumin the past 1, 3 and 5-year period.
From the above inference, we understand that though UTI Equity has performed competitively in the past 3 and 5 years, the performance in the last one year has been dismal as compared to its peers. Birla Sun Life Frontline Equity Fund has managed to beat the returns given by UTI Equity across 1, 3, and 5 years.
Ajay Tyagi is the fund manager who has taken over the reins from Anoop Bhaskar. Tyagi has stated on record that he will stick to the broad strategy of a minimum of 75 to 80 percent in large caps and pool the rest in mid and small caps. However, he also mentioned that he is all up for tweaking sectoral allocations. He maintained that he would increase weightage to stocks pertaining to private sector banks and pharma.
UTI Equity Fund has proven itself to be a long-standing player, given the consistency in returns in all these years, baring the past year. It climbed the ranks, post 2009 and performed admirably. This is a fund that has given even weightage to large, mid and small caps stocks.
Following the style of investment apparent in UTI, this fund also does not seek to go through the roof either on stock valuations or individual holdings. The fund works on a blend of growth and value conscious style of investment. The fund manager does not opt for large cash calls, no matter how the market is.
When one goes through various types of equity allocations in the fund, it would be safe to say that UTI Equity Fund is large cap tilted. The average allocation is such that 75 to 80 percent is invested in large caps, 15 to 20 percent in mid-caps and the rest are pooled in small caps. While exposure in sectors are given a focused stance, exposure to specific stocks are well diversified. Compared to its peers, UTI Equity Fund has had a higher tilt to large caps, especially in the years 2014-15, though in the past months, the relative exposure has been reduced.
Should you buy, sell or hold UTI Equity Fund?
The fund has not performed in the past year despite the fund manager’s idea to tweak the weightage in sectoral allocations. Considering there are better funds among its peers like Birla Sun Life Frontline Equity Fund and SBI Magnum Equity Fund, it makes more sense to make the switch. Our recommendation – SELL!
Good Fund House
Good Fund Size
Average Fund Manager
Poor Performance of last 1 year
Recent change in fund manager