markettrend766
11-05-2009, 06:42 AM
Investors with high risk tolerance can consider buying the units of UTI Opportunities Fund based on its performance over the past two years. The fund trailed the category average in 2006 but bounced back and substantially improved its performance in the last two years.
Over 2007-08 it outpaced its benchmark BSE-100 by 11.5 percentage points and 6.5 percentage points respectively. Only a handful of funds generated positive returns over the two-year period, and this fund tops the list. Its high exposure to a select few sectors pitches it between a theme fund and a diversified fund.
Suitability: The strategy of taking concentrated bets in stocks and sectors based on prevailing economic trends depends largely on the fund manager’s ability to identify specific sector trends. The right timing of entry and exit is paramount for taking active calls to achieve the objective of the fund.
Investors can hold this fund as a diversifier are not part of their core portfolio given its carries higher risk profile compared to pure large-cap funds. The strategy of hedging portfolio with derivative calls might reduce the risk-return trade-off.
Performance: The fund’s NAV lost 17 per cent over a one-year period and outpaced peers such as DSPBR Opportunities Fund and Franklin India Opportunities by a good margin. UTI Opportunities managed this performance with higher cash position and derivatives instruments, but beat DSPBR Opportunities which has similar strategy .
Even over a shorter period of six months, both the peers trailed UTI by more than 12 percentage points. According to the fund manager, the fund stayed in higher cash position most part of past year, due to highly volatile market conditions. But in the past three months the cash position has been reduced and in April portfolio it fell to less than 10 per cent of the assets. He asserted that the fund needs to maintain a certain amount of cash in fixed deposits against its derivative positions and to meet redemption requests.
On a monthly rolling returns basis, in 15 of the last 24 months it outpaced the benchmark BSE-100. This reflects reasonable consistency in returns. The fund trailed the benchmark during the market rallies; however, it contained losses better during major corrections in July and October 2008.
Portfolio Overview: The fund had 29 stocks in its portfolio in April and the top three sectors accounted for 51 per cent of the assets. About 13 per cent of the assets were invested in mid- and small-cap stocks (market cap less than Rs 7,500 crore).
The fund takes concentrated exposures to a few select set of sectors. In 2007 it was bullish on capital goods, power and construction stocks.
As these sectors underwent a heavy correction in 2008, the fund reduced exposures to them and stepped up exposures to defensive sectors such as FMCG, auto and pharma.
Over the past six months it stepped up exposures to banking stocks. The fund manager takes active calls in derivatives and shuffles the holdings between the cash and futures based on the arbitrage opportunities in the portfolio stocks.
Fund facts: The fund was launched in 2005 and Mr Harsha Upadhyaya has been managing the fund since March 2007. The minimum lump-sum investment is Rs 5,000.
Over 2007-08 it outpaced its benchmark BSE-100 by 11.5 percentage points and 6.5 percentage points respectively. Only a handful of funds generated positive returns over the two-year period, and this fund tops the list. Its high exposure to a select few sectors pitches it between a theme fund and a diversified fund.
Suitability: The strategy of taking concentrated bets in stocks and sectors based on prevailing economic trends depends largely on the fund manager’s ability to identify specific sector trends. The right timing of entry and exit is paramount for taking active calls to achieve the objective of the fund.
Investors can hold this fund as a diversifier are not part of their core portfolio given its carries higher risk profile compared to pure large-cap funds. The strategy of hedging portfolio with derivative calls might reduce the risk-return trade-off.
Performance: The fund’s NAV lost 17 per cent over a one-year period and outpaced peers such as DSPBR Opportunities Fund and Franklin India Opportunities by a good margin. UTI Opportunities managed this performance with higher cash position and derivatives instruments, but beat DSPBR Opportunities which has similar strategy .
Even over a shorter period of six months, both the peers trailed UTI by more than 12 percentage points. According to the fund manager, the fund stayed in higher cash position most part of past year, due to highly volatile market conditions. But in the past three months the cash position has been reduced and in April portfolio it fell to less than 10 per cent of the assets. He asserted that the fund needs to maintain a certain amount of cash in fixed deposits against its derivative positions and to meet redemption requests.
On a monthly rolling returns basis, in 15 of the last 24 months it outpaced the benchmark BSE-100. This reflects reasonable consistency in returns. The fund trailed the benchmark during the market rallies; however, it contained losses better during major corrections in July and October 2008.
Portfolio Overview: The fund had 29 stocks in its portfolio in April and the top three sectors accounted for 51 per cent of the assets. About 13 per cent of the assets were invested in mid- and small-cap stocks (market cap less than Rs 7,500 crore).
The fund takes concentrated exposures to a few select set of sectors. In 2007 it was bullish on capital goods, power and construction stocks.
As these sectors underwent a heavy correction in 2008, the fund reduced exposures to them and stepped up exposures to defensive sectors such as FMCG, auto and pharma.
Over the past six months it stepped up exposures to banking stocks. The fund manager takes active calls in derivatives and shuffles the holdings between the cash and futures based on the arbitrage opportunities in the portfolio stocks.
Fund facts: The fund was launched in 2005 and Mr Harsha Upadhyaya has been managing the fund since March 2007. The minimum lump-sum investment is Rs 5,000.