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Mutual Fund Review: UTI Opportunities Fund

Type: Open Ended Equity Diversified
Fund Manager: Siddharth Dembi
Inception Date: 20-Jul-2005
 
UTI opportunities fund was launched in July last year and has completed one year of operation in Indian markets. The scheme seeks to generate capital appreciation and/or income distribution by investing the fund of the scheme in equity and equity related instruments. The main focus of the scheme is to capitalize on opportunities arising in the market by responding to the dynamically changing Indian economy by moving its investment amongst different sectors as prevailing trends change.

As of July 2006 the scheme has Rs 548.77 crores worth of assets under management, and the scheme has deployed 88.82% of its assets in equities and 11.18% in cash and equivalents. The fund manager has been quite aggressive in the past and the equity allocation has gone as high as 99.10% in the month of April06.
 
Although UTI Opportunities fund has been in operations only for a year the performance record so far has not been very encouraging. The scheme has generated negative returns in the last six months period, whereas its benchmark index BSE 100 has appreciated by 9.7% in the same period. In the one-year time frame even the scheme is ranked at 91st place.
 

The scheme has a diversified portfolio of 27 stocks, which is quite good for a scheme having a fund size of Rs 548.78 crores. Top 10 holdings accounted for 59.13% of its equity portfolio. Auto & Auto Ancilliaries sector receives the highest weightage in this month's portfolio, followed by Diversified and Entertainment sector. Top 3 sectors constitute around 44% its total equity portfolio, which shows the fund manager is not hesitant on taking calls on few sectors which he find attractive in the long term.Top 5 holdings are Reliance Industries Ltd, BHEL, ITC, TVS Motor Company and Bajaj Auto Ltd which account for 33.68% of the net assets. The portfolio is spread across stocks with varying market capitalisation and allocation to large cap stocks is around 55%, which is understandable given the investment mandate of the scheme to invest in upcoming companies.Maruti Udyog Ltd was the only stock which was added to this month's portfolio while the scheme exited from ONGC.

 

Normally investors in these kinds of funds have a longer investment horizon as the theme of investing in new and upcoming businesses generally take 3-5 years to fully reap the advantages of its investments. The scheme seems to apply buy and hold strategy to good use, but the results have not been very encouraging till now. The scheme's returns have taken a severe beating in the recent crash and are still struggling to recover from it. Investors may find other schemes from various fund houses based on the same objectives more attractive at this juncture.
 

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