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UTI Mastershare Unit Scheme First Equity Oriented Fund

In Business
March 09, 2020

UTI Mastershare Unit Scheme is India’s first equity oriented fund (launched in October 1986) and having track record of wealth creation for over 30 years.

UTI Mastershare Unit Scheme, an open ended equity scheme predominantly aims to invest in large cap companies having competitive advantage in their respective fields. It follows an investment style of Growth at Reasonable Price (GARP) for stock picking. That means, given the underlying growth in earnings of a company, how much is the reasonable price that one should pay to buy that stock in the portfolio.

UTI Mastershare Unit Scheme aims to invest in companies that are fundamentally strong with control on borrowings, consistent revenue growth, focus on profitability and higher return on capital than cost of capital and consistent operating cash-flows generation. Such companies may generate free cash flows for future expansion and avoid dilution of existing shares.

Owing to this combined approach of GARP plus Competitive Franchise UTI Mastershare Unit Scheme may invest in companies where,

1. The market is underestimating the companies’ ability to sustain growth over much longer phase or the benefits of pricing power.

2. The growth trajectory is improving through industry wide phenomenon like favorable demand cycle, consolidation, clearances of regulatory hurdles or through the company specific factors like cost competitiveness, prudent capacity expansion.

3. The business is capital intensive but the companies invest prudently, execute efficiently

4. The companies having opportunities to reinvest cash flows at high Return on Capital Employed (RoCE)

5. The relative valuation within the sector is attractive.

This in turn gives the investors a long term wealth creation opportunity by owning a portfolio of quality companies.
UTI Mastershare Unit Scheme being categorized as Large Cap Fund, thus has a portfolio of leading well-known companies such as, ICICI Bank Ltd., HDFC Bank Ltd., Infosys Ltd., HDFC Ltd., Bharti Airtel Ltd., Tata Consultancy Services Ltd., Axis Bank Ltd., Reliance Industries Ltd., Kotak Mahindra Bank Ltd. and State Bank of India etc., The Top 10 stocks account for about 50% of the portfolio. The Scheme is currently overweight on private sector banks, IT, Industrial Manufacturing and underweight on Energy, Financial Services, and Consumer Goods as of February 28, 2020.

The Fund has a corpus of over Rs. 6,200 crore with over 6.13 lakh live investor accounts as on February 28, 2020. The Fund aims at securing capital appreciation / or income distribution over a long term, follows a disciplined approach to invest as stated above and has maintained stream of annual dividends every year since its inception. UTI Mastershare Unit Scheme has distributed a total dividend of more than Rs. 3,700 crore in last 15 years.

The scheme has lower portfolio churn. UTI Mastershare Unit Scheme has generated a return (CAGR) of 15.35% against benchmark S&P BSE 100 TRI return of 13.74% since inception as on February 28, 2020.. Furthermore, investment amount of Rs. 10 lakhs made in the fund at inception has grown to Rs. 11.78 crores as against Rs. 7.35 crores as per benchmark S&P BSE 100 TRI during the same period, i.e., generating 117 times returns over the last 33 years.