First and foremost, UTI Dividend Yield Fund is a diversified equity fund. Thus, capital appreciation potential is the most important aspect while selecting a stock along with the expected dividend income. The highlight of the Fund is that it has a Good Performer not just in Market Downturns but even in Bullish times.
The Fund Manager, Swati Kulkarni, believes in sustainablility of cash flows and growth opportunities. She says, " We also look at the scalability of the businesses and management quality. Then of course we have to consider valuations to ensure that we buy stocks that have capital appreciation potential in the long term. Thus we take a complete view.
Our investment processes make it mandatory to meet the management of the company and maintain contact on a quarterly basis. So, certain small cap ideas, where we may not be able to have any regular contact with the management, will not be able to figure in our portfolio. "
The dividend yield is a criteria used to sharpen the focus by narrowing the investable universe to leave out certain opportunities which are risky at this point in time or not very attractive from a valuations perspective. The fund is essentially a bottom-up fund and it cannot really have a predominant top-down approach.
After staying underweight for the last three years, this fund has started increasing exposure to FMCG and pharmaceuticals. It is underweight on technology right now due to the concerns on the volume growth and impact of cross currency movements.In terms of large-cap exposure, there has been a conscious shift, given the risk aversion and rising impact costs, especially with respect to mid-cap stocks. It has a Large Cap allocation standing at more than 50 per cent.
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