Investors can consider buying the units of UTI MNC Fund, given its long-term track record of delivering steady returns. Over one-, three- and five-year time-frames, the fund has outpaced not only its benchmark CNX MNC, but also the Nifty and CNX-500. Over a five-year period, the fund has delivered a compounded annual return of 17.9 per cent, which places it among the top quartile of performers in the diversified category.

In the last year, UTI MNC also delivered higher returns than its peer - Birla Sun Life MNC. The fund has done a sound job of containing downsides, as witnessed in early 2007, during the protracted market correction of 2008-09 or even in the volatile environment over the past 6-7 months. While it may not be a chartbuster during market upswings, it does participate to the extent that it betters its benchmark.

UTI MNC invests in stocks that are either the listed Indian arm of global companies, and where the MNC parent holds more than 25 percent, or where there is a substantial FII and MNC parent combined holding that adds up to over 50 per cent. Apart from the 15 stocks that make up its benchmark and find a place in the portfolio, there are an equal number from outside this universe, though all retain the ‘MNC' flavour.

The fund therefore may best suit investors with a medium-risk appetite as the sector selection gives it a somewhat defensive look.

Portfolio and strategy : MNC stocks offer a good option to investorsbecause of diversification in geographies, and the scale that comes from a large overseas corporation's backing and higher cash-flows. For this reason MNC companies tend to enjoy higher valuations in relation to the broader markets. In that sense, the stocks in the fund's portfolio are not strictly value picks, but are nonetheless viewed favourably by the markets, especially in the current scenario of increasing rates of borrowing.

The fund has typically seen minimal churn with the same set of 29-30 stocks figuring in its portfolio, albeit with frequent tweaks in their weights. Consumer non-durables, pharma and auto sectors have always figured prominently across market cycles in the fund's portfolio, with 15-25 per cent of the assets invested in each of these segments.

These sectors have had a phenomenal run over the last couple of years. Incidentally, capital goods, which have not performed well this time around, too figures prominently in the portfolio. Overall, while there is a certain defensive tilt to the portfolio (if we go by the sector allocation), stock valuations in most of these sectors have soared, propelled by a combination of fundamentals and absence of superior options.

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