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UTI Opportunities Fund (UOF) is one such open-ended diversified equity fund from the stable of UTI Mutual Fund, which follows a fluid style of investing. UOF is primarily mandated to invest in equities and equity-related securities of Indian companies along with debt and money market instruments. Launched in July 2005, the fund has completed a little over 6 years of existence now.
The fund's primary investment objective is "to generate capital appreciation and/or income distribution by investing the funds of the scheme in equity shares and equity-related instruments.
The main focus of this scheme is to capitalize on opportunities arising in the market by responding to the dynamically changing Indian economy by moving its investments amongst different sectors as prevailing trends change."
The fund is mandated to invest 90% - 100% of its total assets in equity and equity-related instruments, and the rest (upto 10%) in domestic debt and money market instruments, to manage its liquidity requirements and as defensive stance.
Over the past one year, taking a view of the markets and opportunities therein, UOF has skewed its portfolio largely towards the large cap segment (64% - 74%), thus attempting to be defensive in its stance, in a scenario where markets have been turbulent but valuation wise they have seemed attractive. In the mid and small cap segment on the other hand the fund has taken a much lesser exposure ranging from 17% - 25%, thus refraining from going aggressive while citing opportunities therein. But a noteworthy point is that in both – large cap as well as mid & small cap segment the fund has held been consistent in its holding.
The fund's exposure to debt and cash over the past one year has not been more than 12% which indicates its tilt towards staying invested in equities, and abstinence from taking aggressive cash calls as well.
Equity Portfolio
| Holdings | Aug 2011 | Sep 2011 | Oct 2011 | Nov 2011 | Dec 2011 |
| ITC Ltd. | 7.6 | 7.0 | 7.5 | 7.1 | 6.9 |
| Cairn India Ltd. | 4.1 | 3.9 | 4.1 | 4.3 | 4.6 |
| HDFC Ltd. | 4.1 | 3.9 | 4.5 | 4.4 | 4.6 |
| CRISIL Ltd. | 3.5 | 3.7 | 4.1 | 4.4 | 4.4 |
| Petronet LNG Ltd. | 6.1 | 5.5 | 4.0 | 4.4 | 4.2 |
| ICICI Bank Ltd. | 4.0 | 4.0 | 4.6 | 4.2 | 4.1 |
| Ambuja Cements Ltd. | 3.2 | 3.5 | 3.7 | 3.7 | 4.0 |
| Tata Consultancy Services Ltd. | 3.8 | 3.7 | 3.5 | 3.8 | 4.0 |
| Infosys Ltd. | 2.7 | 2.9 | 3.3 | 3.2 | 3.5 |
| HDFC Bank Ltd. | 2.8 | 2.7 | 3.5 | 3.4 | 3.3 |
As indicated by the table above, UOF's top-10 equity portfolio constitutes only of 'A' group stocks. Even its latest portfolio (which has 39 stocks in total) discloses the dominance (89.7%) of the 'A' group ones, while holding 'B' group ones have diminutive composition of 7.7% of its portfolio. It also has a petite exposure to a 'Z' group stock.
While identifying attractive investment opportunities, the fund aims to respond dynamically to the changing Indian economic scenario by citing trends. Thus UOF also allows its fund manager to invest in select sectors based on the views of the macro economy. It aims to invest predominantly in 4 to 5 sectors that are expected to outperform the broader market in the short to medium-term.
Hence UOF adopts a combination of both – top-down as well as a bottom-up approach of investing and imbibes in it the flexibility to actively shift its portfolio concentration between sectors and market capitalisation segments. But so far, UOF has refrained from churning its portfolio too often (as revealed by its petite portfolio turnover ratio of 0.47 times), and adopts a "buy and hold" strategy. Moreover, as mentioned earlier the fund has been consistent in its holdings, and the stock bets taken by the fund manager have been able to generate appealing returns for its investors.
Being benchmarked to the BSE-100 Index, UOF holds 39 stocks in its latest (i.e. as on December 31, 2011) portfolio, where the top-10 stocks and top-5 sectors constitute 43.5% and 35.7% respectively of its total portfolio.
How UOF has fared vis-à-vis its peers
| Scheme Name | 6-Mth (%) | 1-Yr (%) | 3-Yr (%) | 5-Yr (%) | Std. Dev. (%) | Sharpe Ratio |
| Mirae Asset India Oppor (G) | -11.7 | -12.2 | 32.0 | - | 8.13 | 0.22 |
| UTI Oppor (G) | -5.0 | -6.5 | 29.9 | 12.9 | 6.92 | 0.25 |
| Fidelity India Spl.Situations (G) | -11.9 | -14.6 | 25.9 | 4.1 | 8.74 | 0.16 |
| Kotak Opportunities (G) | -11.6 | -16.3 | 21.9 | 6.6 | 7.63 | 0.15 |
| HSBC India Opp (G) | -10.1 | -12.2 | 17.6 | 1.3 | 5.95 | 0.13 |
| BSE-100 | -13.7 | -18.3 | 21.0 | 3.2 | 8.09 | 0.13 |
The table above reveals that across time frames, UOF's performance is quite inspiring, where over a 3-Yr and 5-Yr time frame the fund has clocked appealing returns of 29.9% CAGR and 12.9% CAGR respectively in the peer group. Such a performance reveals UOF has been successful in citing attractive investment opportunities for its portfolio, which has thus rewarded its investors.
When assessed on the volatility front too, UOF has exposed its investor to low risk (as revealed by its Standard Deviation of 6.92%), and has been successful in clocking luring risk-adjusted returns (as revealed by its Sharpe Ratio of 0.25). This thus makes UOF a low risk-high return investment proposition in the category.
However a detrimental point is that in the past - during turbulent phases of the Indian equity markets, the fund has shown it tendency to plunge when scenario in a respective sector(s) turns unfavourable.
Fund Manager Profile
| Name of the Fund Manager | Mr. Anoop Bhaskar |
| Total Work Experience | Over 19 years |
| Managing the fund since | Jul-11 |
| Qualifications | B.Com, MBA (Finance) |
UTI Opportunities Fund has been successful in citing attractive investment opportunities for its portfolio, which has thus rewarded its investors. The inspiring risk-adjusted returns generated by the fund without indulging in aggressive in portfolio churning, encourage us to advise you to hold onto your investments in this fund.
All funds falling in the same category may not generate similar returns for you. It is noteworthy that decision of investing in a particular fund should not be taken only based on its 1 or 3 year performance. One should instead prefer the fund which shows consistency across market phases and qualifies based on other performance parameters too. A thorough research might be of a great help.
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