Moderate success, opportunities missed

FUND ANALYSIS/ UTI MEPUS

UTI Master Equity Plan Unit Scheme is a close ended tax planning scheme that emerged from the amalgamation of five other UTI tax planning schemes, launched between 1993 and 1997.

Over the years the fund has more or less stuck to large cap companies with a growth focus. While there has been a reasonable exposure to mid cap companies, small caps have been given a cold shoulder.

Relative to its peer group the fund can be best graded as an average performer. It started out on a strong base, outperforming its benchmark and the category in 2004.

Over 2005 and 2006 the fund delivered below average returns, but within a respectable range of its benchmark. As a result UTI MEPUS has managed to deliver an annualised 44.79 per cent (As of August 21) return since its inception in March 2003.

The moderate success achieved by the fund can be attributed to identifying quality scrips and holding on to them.

However, we noticed that in bear phases, the fund invariably finds itself on the wrong foot. A look at the fund's performance over three bearish quarters (quarters ending June 2004, June 2006 and March 2007) reveals that the fund has fallen more than the category as well as the Sensex.

Upon scratching the surface we found that the absence of opportunistic moves has capped the funds performance.

Overall, investors can look forward to stable and average returns here without too much volatility.