UTI Opportunities is the right fit for those looking for low-risk options or first-time investors in mutual funds. The fund keeps risks at a minimum by investing mostly in large-cap stocks and has been a stable performer across both upswings and down phases of the stock markets.

In the market rally of the last one year, the fund has given 38 per cent returns, higher than the Sensex’s 34 per cent and its benchmark BSE 100’s 36 per cent. Over longer periods, the fund has outdone the BSE 100 by 3-5 percentage points. Its performance over three- and five-year timeframes is better than of peers, such as DSPBR Top 100 and Franklin India Bluechip.

UTI Opportunities predominantly invests in stocks with market capitalisation of ₹7,500 crore and above. Such stocks constitute 80-90 per cent of the holdings across market cycles. Moreover, the fund pushes up cash and debt holdings by up to 10 per cent during phases of volatility or downswings. These two attributes give the fund a safety net, helping contain losses during market corrections.

Deft moves The defensive approach does not hamper the fund’s performance during rallies, though it may not be a chart-buster. The fund deftly moves into equities and latches on to the right sectors and stocks in a turnaround, 2009 being a good example. From only about 70 per cent in equities until March 2009, the fund quickly increased its equity holdings to about 85 per cent by end- April 2009. It also rightly focused on stocks in the software and auto space, all these moves helping it outdo the benchmark in the run-up that followed.

This characteristic is evident in the upturn of the last one year as well, where exposure to cyclical sectors such as banks, construction and automobiles was gradually increased and holdings in consumer non-durables and software were brought down.

But being large-cap focused, it does tend to lag the benchmark in narrower upswings such as the mid-cap led rally of 2012. The fund, hence, is suitable for investors who consider safety and stability more important than chasing high returns.

Portfolio UTI Opportunities generally has a portfolio of 40-50 stocks, with holdings in individual stocks at less than 5 per cent, barring one or two. The latest portfolio sports a good blend of cyclical and defensive sectors among the top five — banks, automobiles, pharma, software and consumer non-durables. The portfolio PE is at a reasonable 18 times, in line with the Sensex and the BSE 100 index. Some of the quality mid-cap names it holds include Persistent Systems, Apollo Tyres and IRB Infrastructure Developers.

Interestingly, the fund has gradually booked profits in the cement space beginning January 2014, after having it among the top five sectoral holdings in 2012 and 2013.

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