FUND PICK: UTI Equity Fund

High risk-adjusted returns, lower volatility

UTI Equity Fund has been ranked in the top 30 percentile (CRISIL Fund Rank 1 or 2) for eleven consecutive quarters in large cap equity category, as defined under CRISIL Mutual Fund Ranking. The scheme primarily aims at securing capital appreciation for unit holders by investing funds in equity shares and convertible and non-convertible bonds of companies with good growth prospects and money market instruments.

The fund, which is managed by Anoop Bhaskar, had a quarterly average assets under management (AUM) of Rs 4,392 crore at the end of September.

The fund has outpaced both its benchmark (S&P BSE 100) and the category across various time frames. In the past two years, the fund has had a compound annual growth rate (CAGR) of 24.24 per cent as compared to the benchmark's 14.35 per cent.

It has also consistently outplayed its category and benchmark across all market phases, i.e., during and after the sub-prime and european crises.

An investment of Rs 1,000 at inception (on August 1, 2005) would have grown to Rs 4,625 by November 30, 2015 - an annualised return of 15.97 per cent against the peer group's 14.99 per cent (Rs 4,237) and the benchmark's 12.59 per cent (Rs 3,407).

A monthly systematic investment plan (SIP) of Rs 1,000 over seven years (on a principal of Rs 84,000) would grow to around Rs 1.53 lakh, delivering an annualised return of 16.83 per cent. Similar investment in the benchmark would have grown to around Rs 1.23 lakh (10.66 per cent).

The fund has also delivered good risk-adjusted returns given the Sharpe ratio of 0.55 for the three-year period ending 30 November. During this period, the category has delivered just 0.35 per cent. The volatility has also been lower given the beta of 0.51, as compared to 0.74 for the category during the period.

The fund has been almost fully invested in equity, with an average 96-per-cent exposure over the past three years, ending October.

The fund has consistently held 49 stocks for the past three years, with Tata Consultancy Services, Infosys, HDFC Bank, ICICI Bank and Reliance Industries being the top five stocks held by it, with an average exposure of 24.76 per cent. At a sector level, the fund has the highest exposure to banks, software, pharmaceuticals and auto sectors, which have delivered returns of 15.7 per cent (as represented by Nifty Bank Index), 23.71 per cent (Nifty IT Index), 33.25 per cent (Nifty Pharma Index) and 23.8 per cent (Nifty Auto Index) respectively, compared with the benchmark's 13.57 per cent.