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

Mutual Fund Review: Taurus Tax Shield

    Taurus Tax Shield has seen a turnaround in performance since 2007, but still remains a volatile offering… The fund has seen a turnaround in its performance since 2007 and has delivered impressively during market rallies since then. The portfolio is also more diversified. It contained its downfall to an average level in 2008 but is still one of the most volatile offerings in this category. Bold investors can look at this fund.   Strategy The fund manager invests across the market capitalisation and sectors. The selection of stocks is made on the basis of long-term business prospects and value creation. Fund Insight Launched in March 1996, the fund was a laggard with just two annual outperformances. Concentrated stock bets and high exposure to mid and small caps led to it being hit harder during market downturns. The number of stocks in the portfolio never exceeded 20 and it was not rare to see the top 5 holdings account for around 60 per cent of the portfolio. After b...

Use Mutual Fund SWPs for getting fixed payments

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   Investors time withdrawals optimally to save on tax The systematic withdrawal plan, or SWP, could be called the lesser known cousin of the much talked about and publicised systematic investment plan (SIP). There's yet another cousin — the Systematic Transfer Plan ( STP ). In SIP, you invest a fixed sum of money at regular intervals (monthly/ quarterly) to buy some units of a mutual fund scheme. In SWP, as the name suggests, you do the opposite: You redeem some mutual fund units from your portfolio to get a fixed sum of money at regular intervals (monthly/quarterly/half year/yearly). In SIP, you get a higher numbers of units when the markets are down, and lesser in a buoyant market. In SWP, going by the product logic, you redeem higher number of units when the markets are do...

AXIS Long Term Equity Fund - The Best Tax Saver Fund for 2016

  AXIS Long Term Equity Fund - Invest Online   History:   The open ended mutual fund was launched on December 21 in the year 2009. It is benchmarked against BSE 200 and managed by the fund manager JINESH GOPANI. Initially the scheme was called as Axis tax saver fund but later it was renamed as Axis long term equity fund with effect from September 2, 2011. Nature of investment: As far as asset allocation is concerned, 97.52% of the stocks are equity and 0.02% is debt based. The primary focus of the fund is to invest in diversified equity stocks that have higher growth potential. Total asset size of the fund is in the tune of 4,996 CRORE as of June 30, 2015. Performance: The performance of the fund for one year, 3 years and 5 years are 23.6%, 29.9% and 19.1 respectively which are far greater than 6.4%, 14% and 5.6% benchmark figures. It has also preformed fairly well against SBI magnum Tax Gain (G) and HDFC tax saver (G). The growth comparison is enumerated below;                        ...

IDFC Classic Equity Fund

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   IDFC Classic Equity Fund IDFC Classic Equity is a large-cap equity fund which currently has assets under management worth Rs. 158.52 crore. It was launched in August 2005. The fund is benchmarked against the BSE-200 Index. Performance YTD 1-Year 3-Year 5-Year Since Inception IDFC Classic Equity 0.93 26.61 6.30 1.01 11.65 BSE 200 1.52 17.31 6.00 1.99 12.98 All figures in % as on January 31, 2013; Returns above one-year in CAGR terms ...

Health insurance guide - Part I

Insurance, by definition, is morbid. What if I die suddenly? What if my home caught fire? What if I had to undergo expensive medical treatment? What if something that I thought happened only to others befell me? Insurers, who work with large samples, calculate the probability of such an event and, hence, the possibility of them having to pay out a sum of money to mitigate, to the extent possible, the effects of that disaster. However, the possibility of you undergoing some kind of expensive medical treatment during your lifetime is far more likely than you dying suddenly or your house burning down. Given that costs at private healthcare facilities, where you are most likely to land up, is high, and, doubling every four years 10 months or so, the rest of your money life could easily go out of whack if you had to incur such expenses. Just 12 per cent of India's population is covered with some sort of health insurance. Pared to the bone, for a comparatively small price, health insu...
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