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Aug 16, 2013, 10.38 PM IST | Source: Moneycontrol.com

UTI Dividend Yield Fund: A good long-term investment option

Financial Advisor Arnav Pandya recommends the fund for investors who are looking for returns in the long-term. He finds the fund to be a comfort for investors looking for stability in their investments.

UTI Dividend Yield Fund's aim is to provide medium to long term capital gains or dividend distribution by investing predominantly in equity & equity related instruments which offer high dividend yield. Financial Advisor Arnav Pandya recommends the fund for investors who are looking for returns in the long-term. “The fund would be a comfort for investors looking for stability in their investments”, he says.

Nature: Equity oriented open ended

Inception:  May 2005

Assets under Management:  Rs 3120 crore at the end of June 2013

Fund Manager: Swati Kulkarni

Analysis

• The fund focuses on high dividend yield stocks for the construction of its portfolio. At the end of January 2012 had the highest exposure to financial services at 24 percent of the portfolio. Energy, IT and Cement were the other top sectors though cash and cash equivalents also comprised a strong 9 percent of the portfolio.

In terms of individual stocks ICICI Bank was the top holding. SBI, Infosys, NTPC, TCS, ITC, ONGC and Hero MotoCorp were some of the other leading holdings. Around 70 percent of the portfolio was in large cap stocks. The BSE 100 was the benchmark and the fund was an outperformer over the one and three year time periods ended December 2011.

• Six months later the portfolio turnover ratio in the fund was 0.6. Financial services remained the top sector with a 27 percent share.  Energy, consumer goods and IT were some of the other leading sectors in the portfolio.  The current assets still remained at 7 percent of the portfolio.

ICICI Bank was the top individual holding with SBI, ITC, Infosys, NTPC, Hero Moto and Ambuja Cements being some of the other leading holdings.  The fund was an outperformer over the one and three year time periods.

• The fund maintained an over 70 percent share for large cap stocks in its portfolio at the end of January 2013.  Financial services were the top sector with energy, consumer goods, IT and cement as other areas with a significant share.

The portfolio turnover of the fund had fallen to 0.43 which was a positive indicator.  ICICI Bank continued to be the top individual holding in the portfolio with SBI, Infosys, ITC, Ambuja Cements, HDFC Bank, NTPC and Grasim being other significant shares in the portfolio. The fund was an outperformer over the three year time periods but an underperformer over the one year one ending December 2012.

• By the end of June 2013 the portfolio turnover ratio had fallen further to 0.26. At the same time the share of large cap stocks in the portfolio had risen to 76 percent. Financial services, consumer goods, energy and IT were the leading sectors in the portfolio of the fund.  ITC was now the top individual holding followed by Infosys, SBI, ICICI Bank, HDFC bank. NTPC, GlaxoSmithkline Pharma and Grasim.

The fund was an underperformer over the one year period but an outperformer over the three year one.

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ICICI Bank SBI Infosys
NTPC TCS ITC
ONGC Hero Motocorp Ambuja Cements
HDFC Bank Grasim GlaxoSmithKline

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