UTI Top 100 – Safe bet for high returns

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unnamedNewZNew (Chandigarh) : UTI Top 100 is a diversified equity fund with a strong bias for large-cap stocks. A marginal exposure to mid- and small-cap stocks help the fund gain from broader market rallies. The fund has outperformed its benchmark index BSE 100 across one, three and five-year periods. It ranks among the top quartile of schemes in its category over the five-year period.

The fund’s performance has improved substantially over the past couple of years. Further, it has outperformed some of its peers such as DSP BR Top 100 Equity and HDFC Large Cap. Units in UTI Top 100 may be purchased through the systematic route to average costs, given the current volatile market condition.

The scheme may be a safe bet for above-average returns over a five-year period. Performance and strategy UTI Top 100 was launched in May 2009 following the broad market turnaround early that year. It has done well in subsequent years, except 2011, when it fell behind peers. From early 2013, UTI Top 100 has managed to deliver healthy returns and participate in the 2014 rally.

During the downturn, the fund takes cash and debt calls to the tune of 10 per cent of its portfolio, but quickly redeploys cash when markets turn around. Interestingly, the fund has increased the number of stocks from around 33 stocks a couple of years back to more than 40 now, making it more diversified.

Over the last three years, the fund took considerable exposure to sectors such as construction, auto ancillary and transport and was thus able to gain from the spectacular rallies in these segments. The once preferred consumer non-durables has witnessed trimming of stakes. Banks and software are the fund’s preferred segments across most cycles. It thus balances cyclicals (momentum) and defensive sectors well.

The fund drastically cut its exposure in the oil and gas sectors. On the other hand, it has increased weightage in industrial products and pharma. Consistent exposure to cement and automobiles cushioned the fund’s returns.

The fund has trimmed its exposure in stocks such as ITC, Reliance Industries and Indraprstha Gas and exited some large overvalued ones such as HDFC. The fund bought into outperformers such as SKF India, L&T, BPCL and BEL. Heavyweight exposure in private banking stocks such as HDFC Bank, ICICI Bank and Axis Bank boosted returns.