Though UTI Master Value has shown optimistic signals from 2008, it can't be a reason for taking an investment call. Investors with high risk appetite can buy this fund
DIVERSIFICATION and clearly defined strategy are key to mitigate risk in any of the investment portfolio and investors of UTI Master Value have learned this lesson the hard way after 12 years of the fund's existence. Launched in July 1998, the UTI Master Value has not really taken up well. Thus, notwithstanding its long existence, the fund has just about Rs 640 crore of assets under management (AUM) today.
PERFORMANCE
UTI Master Value has had an eventful performance record. This could be attributed to a regular change in the fund manager. The fund till date has been through three fund managers, every one having their own style of managing the fund's portfolio.
Some were good and so the fund swiped through well, even the dotcom bubble. It had made 49% returns in 2002 when the broader market indices the Sensex and the Nifty could only generate 3-4% returns. While due to erroneous decision of some other, the fund could not do well in the booming years as well. The fund, managed just about 12% in 2006, when the Sensex and Nifty rendered 43% and 37%, respectively.
However, in 2007, the fund was repositioned and a defined investment strategy was assigned for it. Since then, the fund has been performing in line with the market indices. In 2009, this mid and small-cap oriented fund generated sinful returns of 117% as against 75% to 88% returns by the Sensex, Nifty and the BSE 200, respectively.
In the past three years, this fund has generated almost 60% return, which is far superior to those of the Sensex and the Nifty, which have returned about 16% and 20%, respectively. This implies that Rs 1,000 invested in this UTI Master Value in September 2007 would be worth Rs 1,600 today.
PORTFOLIO
Enhanced portfolio diversification along with defined weight ages of sectors and stock is the new "mantra" of UTI Master Value. Over the period, the fund has doubled the number stock holdings. Currently the portfolio comprises nearly 80 stocks. The exposure to a single stock has also been restricted to just about 5%.
The small-cap holdings of the fund have reduced from 60% to about 42%, giving the large-cap stocks more prominent share of 25% in the pie. Some prominent large cap stock that the fund has recently incorporated in its portfolio includes ICICI Bank, Bharti Airtel, Indian Oil, Tata Motors, Maruti Suzuki and so on.
Going by the fund's benchmark BSE 200, the fund has invested heavily in pharmaceuticals, automobiles and FMCG and is underweight on financial service, power and technology sectors. This appears quite opportunistic since healthcare and FMCG stocks have done extremely well in the past year.
Some of the heavy weighted stocks in BSE 200, such as Reliance Industries, Infosys, L&T, ITC, HDFC do not find space in UTI Master Value's portfolio at all, while stock like Lupin, Navneet Publication, Pidilite, Rallis are highly overweight despite not having equivalent weightage in the indices. With over 96% of equity investments, it seems that the fund is attempting to get the most from the current rally. Also, despite being a mid-cap oriented portfolio, the turnover ratio is restricted to about 55%, which is quite different for most other funds of similar genre.
OUR VIEW
UTI Master Value has had a jerky track record. Although the fund has shown optimistic signals from 2008, the same can not be asserted as a reason for taking an investment call. Those with high risk-return appetite may show inclination in venturing this fund. However, it is advised to well understand the risk of investing in a mid-cap fund before taking a call.
