UTI Mastershare Fund Review (UMF)

About the fund:

UTI Mastershare (UMF) is a large-cap fund, as per the Securities and Exchanges Board of India (SEBI), large-cap equity funds Should invest 80% of total assets in equity and its related securities of large-cap companies

Fund Manager:

UMF is managed by Mrs. Swati Kulkarni, an MBA graduate from Narsee Monjee Institute of Management Studies, Mumbai, a CFA & CAIIB holder and she is working as a fund manager since 2006

Who Can Invest?

The fund is suitable for investors who are seeking capital appreciation for a minimum period ranging from 3 to 5 years or more and have the ability to hold on to their investments in the fund during market cycles.

Exit Load: The fund has an exit load of 1% for the units redeemed in excess of 10% of the investments within 365 days.

Stocks & Sectors

The top 10 Stocks and sectors are as follows:

Asset Allocation:

Moderate Turnover Ratio; Moderate-to-high stock concentration; and benefit from marginal exposure to mid-cap stocks

The current number of total stocks in the UTI Mastershare Fund is 51. The fund has a turnover ratio of 34%, indicating a low churning and stable holding of the investments.

The top 5 stocks in the portfolio of UMF constitute about 34% of the total portfolio and the top 10 stocks allocation in the portfolio allocation is at 49.33%.

This moderate to high asset allocation to the top 10 constituents of the portfolio leads to dependency on the performance of top stocks for the fund to deliver decent returns.

Exposure to mid-cap stocks in the portfolio is at 11.89%. This exposure to mid-cap stocks allows the fund to capture additional returns during the uptrends of the markets. However, increased volatility is also expected due to the same.

Fund Performance & Risk Profile:

Peer Comparison:

Lower Volatility and good risk-return ratio: As shown above, the fund is able to deliver stable returns to its investors successfully over the years and the fund has a standard deviation of 20.08%, while its index S&P BSE 100’s standard deviation is at 21.34% and the 3-year Sharpe ratio of UMF is at 0.69%, better than its benchmark S&P BSE 100

Moderate concentration of stocks & sectors: Though the fund is able to successfully steer through different market cycles, the drawback we notice is its high concentration of the top 10 stocks (49.33%) and top 5 sectors (66.62%).

Recommendation: We recommend equity mutual fund investors accumulate the units of the fund due to its ability to give stable returns to its investors with comparatively lower standard deviation and higher risk-return ratios than its benchmark, however high sectoral & stock concentration, and individual risk profile remain as important factors to be seen.

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