Why this fund got a Bronze Rating

By Nehal Meshram |  16-06-21 | 
 

UTI Flexi Cap Fund is the oldest fund in this category.  Erstwhile known as UTI Equity Fund, the fund moved into the recently introduced Flexi Cap category. However, the fund’s philosophy remains the same.

The fund underwent some changes when Ajay Tyagi took over in 2016. He focusses on investing in high-quality companies with a strong return on capital employed, which could lead to strong free cash flow generation.

Furthermore, after the Securities and Exchange Board of India (SEBI’s) new norms in 2018, Tyagi changed the fund's positioning from a large-cap bias to a multi-cap strategy, with 30%-40% in small/mid-cap stocks. The investment process determines firms that have generated higher operating profits and demonstrated long-term ROE. The team emphasises the trends and patterns discerned from historical performance rather than from forecasts. From a qualitative aspect, it focusses on management quality, business model, and competitive advantages. Tyagi follows a bottom-up approach while picking stocks; his style is driven mainly by quality, growth, and valuation.

He tends to avoid cyclical industries, which are highly volatile, and looks for firms with a strong track record of earnings growth over the past five to 10 years, with stability in margins and the ability to compound earnings higher than market over the next five to 10 years with strong predictability.

We believe the investment strategy has become the guiding force for portfolio construction, and if the manager sticks to the investment process, the fund will generate healthy returns over the long run.

  • Star Rating: 5 stars
  • Analyst Rating: Bronze
  • Fund Manager: Ajay Tyagi
  • Inception: 1992
  • Return: 76.05% (1 year), 18.17% (3 year), 17.64% (5 year), 15.64% (10 year), 13.68% (since inception). Return of regular plan as on June 15, 2021.
  • Date of Analysis: November 2020
  • Number of stocks: 53
  • Assets in top 10 holdings: 41%
  • Assets under management: Rs 18,405 crore (May 2021)
  • Investment Style: Large Growth
  • Total Expense Ratio: 1.97% (regular), 1.21% (direct)
  • Fund Overview 

Watch this short video on the fund.

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