Skip to main content

Mutual Fund Review: UTI Wealth Builder Series II

THE key to optimise returns on any investment is to diversify the risk of the portfolio across various asset classes. And this is precisely UTI Wealth Builder Series II has focused on since its launch towards the end of the financial crisis in November 2008. It has learnt the lessons the hard way. It has seen the sharp decline of equity assets due to the global uncertainties and gold gaining the momentum. As a result, UTI launched the scheme that aimed to get the best of both these asset classes — equity and gold.


   Two years down the line, this notion of combining the two asset classes seems to have finally paid off. UTI Wealth Builder Series II, which took off with just about 100 crore of assets has grown six times in size over the past two years. The fund currently has assets of over 600 crore. And not only has the timing of the fund proved just right for the fund house as it has invested in equities when they were at an all-time low, coupled with its investment in gold has turned out to be an added advantage. The price of the yellow metal has skyrocketed over the past two years. Clearly, early investors of UTI Wealth Builder Series II would be very happy with their returns from this scheme.

Performance:

UTI Wealth Builder Series II is just about a couple of years old and does not have a long performance history. However, even in these two years, the fund has performed fairly well. As the scheme's portfolio comprises equity and gold, its performance can be compared with a suggested model benchmark (as suggested by UTI mutual fund house) — incorporating returns of both these asset classes in the ratio of 65:35 to BSE 100 equity index and prices of gold in India, respectively.


   Since its launch in 2008, UTI Wealth Builder Series II has generated about 100% returns till date. The model benchmark index has returned about 91% during this period while the broader Nifty index has delivered about 102% returns so far during this period.


   If one were to analyse the yearly performance, 2009 — the year of market recovery — saw the fund generating about 73% returns as compared to 64% returns by the model benchmark and 76% returns by the Nifty.


   In the current calendar year, UTI Wealth Builder Series II has returned about 14% gains so far against 16% returns by its model benchmark index and 14% returns by the Nifty.

Portfolio:

With the gold price rising more than 50% over the past couple of years, UTI Wealth Builder Series II has definitely been a beneficiary of this upsurge. The fund has been gradually increasing its exposure in gold ETFs (exchange traded funds) from about 8.5% in early 2010 to nearly 10% by the end of the current calendar year.


   Another factor that has worked in favour of this fund is the timing of its launch in November 2008 when most blue-chip stocks were available at very low prices. One can find scrips like ICICI Bank, HDFC Bank, SBI, BHEL, GAIL, Cairn India and Titan Industries at extremely lucrative valuations. As the fund has been holding on to these stocks from early 2009 to till date, each of them, having appreciated multifold since then, has boosted its net asset value (NAV) tremendously.


   The fund has invested in Nestle India, Petronet LNG and Kotak Mahindra Bank and also has yielded decent returns. In fact, if one were to analyse the notional profit quotient of the fund from its current portfolio, almost 94% of its equity holdings are currently in the green zone. They are quoting a price higher than the price at which these were invested into. As far as the diversification is concerned, its 600 crore portfolio is decently diversified into about 31 equity stocks, gold ETFs and other assets like bank deposits.

Our View:

UTI Wealth Builder Series II has introduced an altogether different concept of investing in the mutual fund industry by diversifying its portfolio, across asset classes. Moreover, the scheme's choice of equity stocks and the returns thereon have also been commendable so far. Investors can definitely consider this scheme as an investment option.

 

Popular posts from this blog

ICICI Prudential Balanced Fund

 ICICI Prudential Balanced Fund scheme seeks to generate long-term capital appreciation and current income by investing in a portfolio that is investing in equities and related securities as well as fixed income and money market securities. The approximate allocation to equity would be in the range of 60-80 per cent with a minimum of 51 per cent, and the approximate debt allocation is 40-49 per cent, with a minimum of 20 per cent. An impressive show in the last couple of years has propelled this fund from a three-star to a four-star rating. The fund has traditionally featured a high equity allocation, hovering at well over 70 per cent, which is higher than the allocations of the peers. But in the last one year, the allocation has been moderated from 78-79 per cent levels to 66-67 per cent of the portfolio. ICICI Prudential Balanced Fund appears to practise some degree of tactical allocation based on market valuations. Within equities, well over two-thirds of the allocation is parked i...

Mutual Fund Review: Religare Tax Plan

Tax Plan is one of the better performing schemes from Religare Asset Management. Existing investors can redeem their investment after three years. But given the scheme's performance, they can continue to stay invested   Given the mandated lock-in period of three years, tax saving schemes give the fund manager the leeway to invest in ideas that may take time to nurture. Religare Tax Plan's investment ideas revolve around 'High Growth', which the fund manager has aimed to achieve by digging out promising stories/businesses in the mid-cap segment. Within the space, consumer staples has been the centre of attention for the last couple of years and can be seen as one of the key reasons for the scheme's outperformance as compared to the broader market. It has, however, tweaked its focus and reduced exposure in midcaps as they were commanding a high premium. The strategy seems to have worked as it returned a 22% gain last year. Religare Tax Plan has outperformed BSE 100...

Stock Dividend Yields

During a bull run, it’s very easy to ignore stocks with high dividend yields. After all, what could be more enticing than a growth stock? But in times of crisis, these boring ones tend to be the most sought after. The reason being that not only do dividends provide a cushion when the market is in the doldrums but such stocks also tend to fall less. The lure of dividend yield stocks is not easy to ignore. These stocks offer capital appreciation as well as cash payments. But logically, any company that pays a substantial portion of its earnings in dividends is reinvesting less and, therefore, would grow at a slower pace. So the trade-off is between higher dividend yields for lower earnings growth. On the other hand, companies with high growth potential and volatile earnings tend to pay less by way of dividends, if at all. Such companies would rather reinvest their earnings to sustain their growth. The capital appreciation of growth stocks is obviously higher than in dividend yield ones. ...

Women need to plan for Retirement

Plan for Retirement Online       Higher life expectancy, lower pay and fewer work years necessitate thorough planning.   Women have raced ahead of men in various fields but, when it comes to retirement planning, they tend to lag behind. Despite saving a higher proportion of their salary, compared to men, women generally do not take retirement planning seriously. Below are some of the reasons why they should: According to the United Nations Department of Economic and Social Affairs, in India, the life expectancy of women is 69 years and, of men, it's 66 years. Due to this, a woman will need an additional `55 lakh to manage her living expenses (see table).Besides, usually, women work fewer years compared to men to take care of children and family.Further, a recent study by Korn Ferry Hay Group shows that women in India earn 18.8% less than men. Not to mention, a higher life expectancy can also mean higher medical expenses as the likelihood of health ailments such as diabetes, high...

Tax Planning: Income tax and Section 80C

In order to encourage savings, the government gives tax breaks on certain financial products under Section 80C of the Income Tax Act. Investments made under such schemes are referred to as 80C investments. Under this section, you can invest a maximum of Rs l lakh and if you are in the highest tax bracket of 30%, you save a tax of Rs 30,000. The various investment options under this section include:   Provident Fund (PF) & Voluntary Provident Fund (VPF) Provident Fund is deducted directly from your salary by your employer. The deducted amount goes into a retirement account along with your employer's contribution. While employer's contribution is exempt from tax, your contribution (i.e., employee's contribution) is counted towards section 80C investments. You can also contribute additional amount through voluntary contributions (VPF). The current rate of interest is 8.5% per annum and interest earned is tax-free. Public Provident Fund (PPF) An account can be opened wi...
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