UTI Equity Funds

The UTI Equity Fund is classified as a very high-risk scheme that aims to create long-term capital generation and is suitable to investors who seek to invest in equity instruments of companies with good growth prospects across the market capitalization spectrum. The fund is suitable for investors who can endure the possibility of high risk.

The UTI equity mutual fund offers Regular Plan and Direct Plan. These plans further provide Growth Option, Payout of Income Distribution cum capital withdrawal Option, and Reinvestment of Income Distribution cum capital withdrawal option. The minimum amount of investment under all plans and options of UTI Equity Fund is Rs 5,000 while the minimum SIP amount is Rs 500 for daily, weekly and monthly options and Rs 1500 for quarterly options.

UTI Equity Fund Investment Objective

The objective of the UTI MF Equity Fund is to generate long term capital appreciation by mainly investing in equity and equity related securities. The scheme invests in companies in a flexible manner across the market capitalization spectrum. However, there can be no assurance or guarantee that the investment objective of the UTI Equity Fund would be achieved.

The UTI Equity Fund aims to achieve this investment objective by investing in high quality stocks in secular growth industries. It aims to generate economic value through the cycle rather than highly volatile cyclical industries. The investment strategy of this UTI scheme involves picking stocks with strong earnings quality, high operating cash flow and high free cash flow characteristics.

Risks Involved in UTI Equity Funds

The UTI Equity Fund is categorised as a very high risk and its benchmark is also listed as very high risk. The standard risks associated with UTI MF Equity Fund include trading volumes, settlement risk, liquidity risk, default risk including the possible loss of principal. Also, the value of the investment may go up or down as the price, value and interest rates of the securities in which the scheme invests fluctuates.

Returns Potential in UTI Equity Funds

UTI Equity Fund has performed moderately since its inception and has delivered 13.88 percent (for Direct option) returns in 23 years. In the last five years, the fund has delivered a return of 14.25 percent returns against the 17.79 percent returns of benchmark and delivered 6.70 percent returns in the last three years against the benchmark return of 12.70 percent.

The UTI MF Equity Fund has performed better than the benchmark in the past one year by clocking the return of 7.43 percent compared to benchmark return of -0.08 percent. The past performance of the fund, whether it has been good or bad, however, is no guarantee for the future performance and it will be shaped by a multitude of factors.

Who Should Invest in UTI Equity Funds?

The UTI MF Equity Fund is suitable for those investors who wish to build a core equity portfolio holding and invest in businesses that generate economic value over a long time period. This is the best equity fund for those investors who seek long-term capital appreciation and want their investments to be parked in companies across market capitalisation spectrum.

The UTI equity fund adopts a bottom-up investment and stock selection approach. This fund is suited for those investors who have an investment horizon of five or more years. Also the investment through Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market. Nonetheless, an investor must make an informed decision and make sure whether this fund meets his financial and investment goals and adheres to his risk appetite.