The fund may lack pizzazz but it is a solid offering nonetheless.
Manager Swati Kulkarni has been associated with UTI AMC for the past 21 years and as a portfolio manager since June 2004. Kulkarni has extensive analyst experience and a strong track record as a portfolio manager. Kulkarni follows a benchmark-aware large-cap strategy and usually picks stocks from the S&P BSE 100 index. The portfolio’s sector weights are also loosely aligned to those of the benchmark index. Benchmark heavyweights such as HDFC Bank, Infosys, ICICI Bank and TCS often feature among the top holdings. She attempts to outperform the benchmark by underweighting/overweighting the chosen stocks. She has displayed good stock-picking abilities even with non-benchmark stocks. For instance, her conviction in materials player Asian Paints because of its competitive position and pricing power has paid off over the long haul. Yet, her focus on quality—established names with strong business models and good corporate governance standards—means she stays away from some smaller names, which can result in the fund lagging its more aggressive peers during an upturn. Also, as tactical plays aren’t a part of her strategy, Kulkarni is unlikely to be able to compensate after missing out on an inflexion point.
Notwithstanding the caveats, the mild-mannered approach has its appeal as it can keep the fund competitive on the risk front and deliver pleasing results over the long term. The fund’s performance, especially in the testing markets of 2010 and 2011, has been noteworthy. On Kulkarni’s watch (Nov 2006 to Dec 2014), the fund (up 12.8% annualised) has bettered both its benchmark index S&P BSE 100 (10%) and the category average (11.5%). The performance ranks in the category’s 34th percentile on an absolute return basis and 26th percentile on a Morningstar risk-adjusted return basis. There is no reason to believe she won’t be able to deliver in future as well. Hence, we reiterate the Bronze rating.
Morningstar Analyst Rating™
Large-cap focused and evidently mindful of the benchmark index.
Swati Kulkarni is a competent and experienced manager who is backed by a stable investment team.
UTI has a strong backing from T.Rowe Price, but certain aspects could be improved in our opinion.
Kulkarni plies relative valuation techniques with a qualitative overlay when choosing stocks.
Under Kulkarni, the fund has been a strong performer on risk/reward parameters.
The fund’s price is lower than that of the median offering from the category.
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