UTI goes long on Reliance - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

UTI goes long on Reliance

Nov 9, 2000

The Unit Trust of India, the country’s largest Asset Management Company (AMC), has announced the portfolio of its flagship US 64 scheme. The scheme’s market value of the net assets presently exceeds Rs 195.5 bn (approximately US$ 4.3 bn). Needless to say, the UTI has once again surprised investors.

Company/Issuer Instrument Weightage (%)
RBI G-Secs 17.3
Reliance Equity 12.3
Reliance Petroleum Equity 4.7
ITC Equity 4.6
HFCL Equity 4.5
Infosys Equity 3.7
Reliance Petroleum Warrants 2.2
Satyam Computers Equity 2.1
ICICI Equity 1.9
Hindustan Lever Equity 1.7
Total market value of net assets (Rs bn) 195.5

UTI has, to put it modestly, gone long on Reliance. The US 64’s exposure to the Reliance Group (both Reliance Industries and Reliance Petroleum) exceeds 19.2% of its net assets (at market value). As a direct consequence of this, US 64 has the highest exposure to the refining/petrochemicals sector (20.4%).

Next, in terms of weightage, is the Reserve Bank of India. The fund, which has a stated objective of investing in equity as well as debt, has a large exposure to government debt (17.3%), a relatively low risk investment. However, despite the management's stated intention of bringing about a balance in the exposure to debt and equity, the scheme continues to have a large bias towards equity.

The TMT (Technology – Media – Telecom) stocks come in third with an exposure of 17.3%. Here again, the exposure is mostly to companies that do not command a sound reputation in the markets. These include HFCL, Satyam Computers, Zee Tele, Global Tele and Pentamedia. To be fair, UTI does have a highly respected company in Infosys Technologies, in its portfolio. Another key investment of the scheme is in ITC (4.6% of net assets). The schemes total investment in the FMCG sector is a moderate 6.7%.

The US 64 has successfully managed to come out of the tumultuous days when it was swamped by redemption requests. The AMC should be credited with the turnaround that has been affected in recent years. However, is not the US 64 exposing itself to high concentration risk by investing over 19% of its funds in just one business group? Also, does not the fund’s policy of investing in companies lacking a sound track record increase the risk of its equity portfolio?


Equitymaster requests your view! Post a comment on "UTI goes long on Reliance". Click here!

  

More Views on News

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

Sundaram Bluechip Fund: Will Hold the Stable Horses (Outside View)

Sep 18, 2020

PersonalFn briefly outlines the newly launched NFO note HSBC Corporate Bond Fund.

Wait! Don't Chase Smallcaps Now (Profit Hunter)

Sep 18, 2020

Let the markets take a breather before you jump in.

How Much Money Do You Need to Be a Professional Trader? (Fast Profits Daily)

Sep 17, 2020

In this video I'll answer a question I get asked often: How much capital do I really need to trade the markets for a living? Let's find out...

A Contrarian View on Whether You Should Load Up on Small Caps podcast (Views On News)

Sep 17, 2020

Rahul Shah discusses whether the SEBI circular is the perfect time to start investing in good quality small caps

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

I Recommended this Stock over Page Industries because it's Relevant to Doubling Your Income (Profit Hunter)

Sep 7, 2020

Things are not often what they seem in the market and how you can take advantage of this.

The NASDAQ Whale Could Harm Your Portfolio (Fast Profits Daily)

Sep 7, 2020

The discovery of Softbank pushing up prices on the NASDAQ will cause volatility in the market. Stay alert!

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Sep 18, 2020 (Close)

MARKET STATS