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30 September, 2014 23:22 IST
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Source: rss (30-Sep-14)
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Investors can buy the units of UTI Midcap Fund in small quantities, as it delivers reasonable returns over three to five years.

The fund has done better than its benchmark, CNX Midcap, over one-, three- and five-year periods. It has bettered the benchmark by 2-6% points.

But it has been a mid-quartile performer in its category. Over the past five years, UTI Midcap has managed to deliver compounded annual returns of 3.7 %.

IDFC Premier Equity, ICICI Pru Discovery and HDFC Midcap Opportunities have delivered much higher returns and have done better than the CNX Midcap by 6-12% points.

But UTI Midcap has done better than Birla Midcap and Franklin India Smaller Companies.

The fund takes a valuation approach to churning sectors and does not take too much concentrated exposure to either stocks or sectors.

By not going overboard on momentum sectors, it has not been able to gain fully from rallies in such segments.

UTI Midcap may be suitable for investors looking to diversify their portfolios. Investors with a moderate risk appetite can consider parking small sums in the fund or go for a systematic investment plan.

Portfolio, Strategy

UTI Midcap takes significant cash exposure during market correction. In 2008-09, this was in excess of 30 % of the portfolio at times. In 2011, the fund again increased cash and debt positions to about 9 % of the portfolio.

By betting on consumer goods, financial services and software, the fund was able to benefit from the rally in 2009-10.

In the last couple of years, though, the fund has reduced exposure to consumer goods considerably as the sector trades at expensive valuations. It increased investments in the pharma sector.

Exposure to most individual sectors is restricted to less than 12 % of the portfolio. Individual stocks, too, do not account for more than 5 %.

This indicates that the fund takes a cautious route to allocations across segments.

Again, the risk profile of UTI Midcap is also tempered by the fact that it invests in more than 60 stocks and spreads its investments thin.

The fund generally tends to participate well in market rallies, while falling in line with its benchmark during market corrections.

Though not the best in its category by returns, investors may invest in the fund as it may provide steady benchmark-beating returns over three to five years.

The NAV of the growth option is Rs 34.70 a unit.

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.


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