UTI Mid cap fund: Apt for aggressive risk profile

UTI Mid cap fund belongs to Small and Mid cap space with an objective to appreciate capital by investing primarily in mid cap stocks. An investor with a more aggressive risk appetite can look towards investing in this fund, reckons financial advisor, Arnav Pandya.

Nature: Equity oriented open ended

Inception: April 2004

Assets under Management: Rs 280 crore at the end of March 2012

Fund manager: Anoop Bhaskar

Analysis

• This a fund that invests in the  mid cap space into stocks that constitute the CNX Midcap 200 and S&P CNX 500 index only. It will also avoid the top 50 stocks by market cap. At the end of March 2011 the fund had the highest exposure to the automobile sector with 17 per cent of the portfolio allocated to this area. Following this there were three sectors with a similar allocation of 12 per cent each and these were financial services, Pharma and consumer goods. Nearly 10 per cent of the portfolio was in cash and cash equivalents which also showed that the fund was waiting for better opportunities to come along its way. In terms of the individual stocks Eicher Motors was the top holding of the fund with a 5 per cent exposure. This was followed by Rallis India, Coromandel International, Motherson Sumi System, Bank of Baroda and IndusInd Bank. The fund  was outperforming its benchmark the CNX Mid cap over the one and three year time periods and had a turnover ratio of 0.7 times.
• At the end of August 2011 automobiles remained the top sector holding in the portfolio followed by Pharma and financial services.  The fund had reduced its cash and cash equivalents in the portfolio to half the level seen in March 2011. The top three individual holdings of the fund also remained the same with Eicher Motors, Rallis India and Coromandel International making up the list. This was followed by Supreme Industries and Indusind Bank. The funds turnover ratio dipped below 0.6 times and it was an outperformer over the benchmark for the one and three year time periods.
• The fund continued with its buy and hold strategy for the core portfolio though there was a change witnessed in the sector positions at the end of February 2012 from the position in August 2011. Financial services were the top sector with an exposure of 16 per cent. This was followed by Pharma, automobiles and consumer goods. Eicher Motors remained the top holding in the fund with its individual exposure above the 5 per cent mark. This was followed by Rallis and Indusind Bank.  Bank of Baroda, Supreme Industries, Wabco and Arvind were some of the other stocks with a high exposure in the portfolio. At the end of December 2011 the fund was outperforming its benchmark over the one and three year time periods. Its turnover had dropped further to 0.44 times.
• This fund is suitable for investors who want an exposure to the mid cap and small cap space so it is useful for a more aggressive portfolio approach. Within this space it would be appropriate for those who want to grow their investments through the buy and hold strategy over a period of time.

- Arnav Pandya

The author can be reached at arnavpandya@hotmail.com

Disclaimer: Views expressed in this article are entirely personal.