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

Mirae Asset Healthcare Fund

Best SIP Funds to Invest Online   Mirae Asset Global Investments (India) has launched Mirae Asset Healthcare Fund. The NFO of the fund will be open from June 11, 2018 to June 25, 2018. Mirae Asset Healthcare Fund is an open-ended equity scheme investing in healthcare and allied sectors. The scheme will invest in Indian equities and equity related securities of companies that are likely to benefit either directly or indirectly from healthcare and allied sectors. The investment strategy of this scheme aims to maintain a concentrated portfolio of 30-40 stocks. Healthcare is a broad secular theme that includes pharma, hospitals, diagnostics, insurance and other allied sectors. The fund will have the flexibility to invest across markets capitalization and style in selecting investment opportunities within this theme. Neelesh Surana and Vrijesh Kasera will manage this fund. In a press release, Swarup Mohanty, CEO, Mirae Asset Global Inves...

How to Decide your asset allocation with Mutual Funds?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) How to Decide your asset allocation ? The funds that base their equity allocation on market valuation have given stable returns in the past. Pick these if you are a buy-and-forget investor. Small investors are often victims of greed and fear. When markets are rising, greed makes the small investor increase his exposure to stocks. And when stocks crash to low levels, fear makes him redeem his investments. But there are a few funds that avoid this risk by continuously changing the asset mix of their portfolios. Their allocation to equity is not based on the fund manager's outlook for the market, but on its valuations. Our top pick is the Franklin Templeton Dynamic PE Ratio Fund, a fund of funds that divides its corpus between two schemes from the same fund house-the...

GOLD ETFs

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   GOLD ETFs       Gold funds and ETFs have also lost the tax advantage they enjoyed over physical gold after the Budget changed the rules for long-term capital gains from non-equity funds.   Last year, gold exchange traded funds ( ETFs ) had gained a great deal from the depreciation in the rupee and the UPA government's move to impose additional levy on gold imports, making it an attractive option for investors. The landed price of the yellow metal had surged, pushing up the net asset value ( NAV ) of gold ETFs. However, the recent budget proposal by Finance Minister Arun Jaitley has thrown a spanner in the works for gold fund investors. The revised tax structure for all non-equity funds, includi...

IIFL NCDs

Buy Gold Mutual Funds Invest Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Call 0 94 8300 8300 (India) IIFL NCDs IIF's six-year unsecured NCD 2012 Risk-wary investors should stay away from this issue, and even, risk-taking ones should think twice It is a public issue of unsecured redeemable non-convertible debentures ( NCDs ) by India Infoline Finance ( IIF ), an unlisted company, which is a 98.9 per cent subsidiary of India Infoline, a listed company. The issue seeks to raise Rs 250 crore with an option to retain over-subscription up to Rs 250 crore taking the total potential issue amount to Rs 500 crore. It will be open for public subscription from September 5 to September 18 with a minimum application size of Rs 5,000 in the form of five NCDs of face value Rs 1,000, TENURE & RATES: IIF will redeem the NCDs at the end of six years, and investors wanting out before six years will be able to sell the...

Tax saving tools to maximise returns

  An Individual can claim a deduction up to Rs 1 lakh U/S 80C of the Income-Tax Act, 1961 ('Act') by incurring a certain expenditure or making specified investments. Few of the popular schemes which are generally availed of by the individuals, inter-alia, include the following: Expenditure-Related Deductions Broadly, the expenditure-related deductions include tuition fees and home loan payments.    Tuition fees for full-time education in any Indian university, college, school, and educational institution, for any two children is eligible for deduction. However, development fees or donations are not considered.    The principal amount re-paid against a home loan to banks or certain category of employers is also eligible for deduction. Stamp duty, registration fees and other expenses incurred for the purpose of acquisition of such a house property are also eligible for deduction.    It should, however, be noted that the cost of renovation/house repairs after the completio...
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