Skip to main content

Mutual Fund Review: UTI Dividend Yield Fund

 

LAUNCHED in May 2005, UTI Dividend Yield Fund has been a slow but steady performer of the mutual fund industry. Despite a poor start in the initial few years of its launch, this scheme has emerged as one of the better ones in the industry. The scheme's increasing popularity is also evident from the steady growth in its assets under management, or AUM, which has grown by more than 70% in the past one year alone. UTI Dividend Yield today commands a respectable size of about 3,000 crore in AUM.

PERFORMANCE:

Though UTI Dividend Yield Fund has been doing fairly well since 2007 — when it first outperformed the broader market indices, namely the Sensex and the Nifty as well as its benchmark index, the BSE-100, by good margins, what marked it out was its ability to curtail the decline in its net asset value (NAV) the very next year. While the global financial meltdown pulled down the returns of major Indian equity indices by over 50% in 2008, the scheme managed to stem the decline to about 44% in the NAV of UTI Dividend Yield Fund. And that too, when equity mutual fund schemes, on an average, had lost about 55% that year.The fortunes of this fund, thus, changed overnight and it shot up the mutual fund ranking charts from being an average performer to a top quartile performer. Since then, there has been no looking back with UTI Dividend Yield delivering consistently.


   Sample this: it returned a whopping 86% gains in 2009 which was more or less at par with the returns of the Sensex, the Nifty and the BSE-100. Again in 2010 — which was marked by extreme volatility — UTI Dividend Yield managed to deliver a decent return of about 24% against the index returns ranging from about 15-17%. In the current calendar year too, while the indices have registered a decline of about 12% so far, UTI Dividend Yield is marginally better placed with a decline of about 10% in its NAV.


PORTFOLIO:

UTI Dividend Yield clearly boasts of a large cap equity portfolio having invested into many of the prime blue-chip equity stocks. However, though this fund is stated to invest in high dividend yielding companies, the same is not really reflected in its current portfolio. Most of the stocks invested into have trailing dividend yield ranging from about 1-4%. The portfolio, thus, mostly resembles the portfolio of any other large-cap equity mutual fund.


   What is noteworthy, however, is the extent of diversification undertaken by the fund manager. The 3,000-crore portfolio is extensively diversified to incorporate some 50 stocks, thereby restricting the exposure per stock to just about 4-5%. The only exception here is Infosys Technologies which currently commands a share of about 7% in the portfolio.


   As far as the holding tenure of the stocks is concerned, this is clearly a long-term investor's portfolio as most of the stocks held by the fund are at least more than a year old. In fact, stocks such as SBI, Birla Corporation, Greaves Cotton, Clariant Chemicals, Tata Chemicals, Marico, Gujarat Mineral Development Corporation, ONGC, Akzo Nobel, NTPC and Indian Oil Corporation are part of the portfolio since 2005. It is hardly surprising then to note that the fund has booked handsome profits on these holdings over a 5-year period. If one were to consider the profit quotient of this fund, currently 78% of the equity portfolio is in the profit zone, indicating that the current market value is higher than the cost of investment.


OUR VIEW:

A large cap focussed portfolio, extensive diversification and an investment strategy to hold the funds for a fairly long time clearly make UTI Dividend Yield an ideal investment for a risk-averse investor. The fund has not only taken cautious bets over a period of time, but has also proved its mettle in both a bullish and bearish market phase. However, it would help if the portfolio had a higher number of high dividendyielding stocks.

 

Popular posts from this blog

Real Returns in Investing

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 Real Returns in Investing     A Anil Singh (name changed), 44, works with a private company and believes in investing his entire savings in fixed deposits. His financials from the year 2000 till date is given in the table. Anil's savings in FDs gave him an average return of around 8%. The total amount saved over the 174 months (From January 2000 to June 2014) is Rs 49.80 lakh. The value of his investment today is around Rs 66.71 lakh. Naveen Singh (name changed), 44, works in a similar profile like Anil. However his expenses were on the higher side. His financials are as in the table. Naveen invested only in equities. The total amount saved over the 174 months (From January 2000 to June 2014) is Rs 38.40 lakh. The v...

Budget 2014 Highlights for Saving

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   The new finance minister Arun Jaitley has just presented his first budget. What measures does the budget contain that will specifically impact savers and investors? Here they are: 1. Housing loans exemption for self-occupied properties increased to Rs2 lakh: Earlier this amount was Rs1.5 lakhs. This move barely keeps pace with the inflation in asset values.   2. Investment limit under 80 (C) increased to Rs1.5 lakh: This is a good move again and offers some relief to taxpayers.   3. IT exemption increased to Rs2.5 lakh, Rs3 lakh for senior citizens. This comes as a minor relief for taxpayers.   4. Annual PPF ceiling to be enhanced to Rs1.5 lakh, from Rs1 lakh: This is in tune with the change in 80C.   5. Long term capital gains tax for debt funds has been rai...

ICICI Prudential MIP 25 - Invest Online

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   ICICI Prudential MIP 25     (CRISIL Rank 2)   This scheme was launched March 2004. Please see the chart below for the one, two, three and five years annualized returns from this scheme. The minimum investment in the scheme is Rs 5,000. The asset allocation of the portfolio is 24% equity, 72% debt and 4% cash equivalent and others. Please see the chart below for the monthly dividends declared by the scheme, on a per unit basis, over the last 5 years.   For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call Leave a missed Call on 94 8300 8300 Leave your comment with mai...

Franklin India Smaller Companies Fund - Invest Online

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Franklin India Smaller Companies Fund   While the universe of small-cap stocks in India is vast, there are very few equity funds which take on the task of sifting through this space for good long-term bets. Franklin India Smaller Companies Fund has managed this with aplomb. What we like about this fund is its significant out-performance of its category and benchmark over the last four years, and its ability to moderate portfolio risk despite investing in the riskiest segment of the equity market. This fund's stock selection strategy, like that of Franklin India Prima Fund is focused on finding companies that generate positive cash flows across business cycles. High return on investment and manageable leverage are also filtering criteria. Says R. Janakiraman, fund ma...

How to open a Capital Gains Account?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   How to open a Capital Gains Account? You can open a capital gains account in an authorized bank. The Government has notified 28 banks which can open the Capital Gains Account on behalf of the Government. You have to apply for opening the account by filling out the required application form (Form A) and submit proof of address, PAN card and photograph. You cannot withdraw funds from a capital gains account using a cheque book or ATM, like you do in your normal savings bank account. There are procedures to be followed to withdraw funds from the capital gains account. Investment in Specified Bonds Section 54EC of Income Act provide that if the seller invests whole or part of capital gains arising from the sale of asset in specified Capital Gains, within a period of six months of the ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now