Wealth creation with moderate risk!

By Rahul Pithadia: Large cap funds turn out to be the best investment option if the investment is made for the first time.  Large cap funds are those in where the major proportion of the investment is made in blue chip companies with a market capitalization value of more than $10 billion. It basically reflects the performance of the economy and the corrections are much less because they have huge resources to go through the bad market phase. However, they do not deliver exceptional results in the bulls market but meet minimum expectations of the investors with comparatively lower risk than smaller companies. One of the best examples is mentioned below:

UTI Equity fund continued to outperform Nifty even in the recent turmoil. This can be measured by looking at the Relative Strength Comparative chart that is plotted below the NAV of the fund chart. The rising segment represents out performance.

UTI equity fund. 20151214

Subtle shift: There is minor shift in the fund holdings out of the stocks and into the Cash component. Previously the cash component was nearly 3% which has now increased to 6.40%. Looking at the overall economic and global scenario I think this is a correct step and once we see a move on downside in Nifty that will provide better opportunity to invest in the stocks.

Portfolio Analysis: As per the sectoral holdings Banking/Finance have been most favored sector for this fund as it is contributing more than 20% to the entire portfolio followed by Automotive and Technology Sector. At stock level the fund has diversified holdings into 76 stocks with Top 5 stocks contributing 23.06% to the entire portfolio. Top Holdings and Sector Allocation for this fund are shown below.

Top Holdings:

Top Holdings 20151214

Sector Allocation:

Sector allocation 20151218

Returns and Performance in compared to its Benchmark S&P BSE 100:

Returns as on 13th October, 2015

Returns 20151214

Risk Profile: This fund has complete exposure in Equity instruments hence we consider this fund as High Risk hence only Risk taking investors should invest in this fund once the corrective action gets complete.

In a nutshell, from long term perspective this can be a good pick for investments but in staggered fashion or by way of SIP. This fund has continued to show its out performance even now. Also avoid small cap exposure or choose wisely as the risk is high under current scenario.

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