UTI thinks contrarian, rolls out new scheme

Close on the heels of raising Rs 2,080 crore via its Leadership Scheme, UTI Mutual Fund has now launched UTI Contra Fund - an open-ended equity oriented Scheme.

The objective of the scheme is cash in on the impact of irrational investor behaviour. The fund's focus will be on those stocks that are undervalued because of the cyclical and behavioural of the markets. To put it simply, it will sell when a stock is on the rise and vice versa.

"The contrarian strategty is different from the value strategy. While the former mixes trend analysis with strong business potential, good management and positive outlook, the latter would concentrate more on the P/E multiples," A K Sridhar, chief investment officer, said.

Several contrarion funds have been launched over the past few months. Chola, Kotak and ING ATM (against the market) are some of the recent launches.

Since experts feel that the markets are currently in an overvalued zone, fund managers are flocking to adopt a contrarion philosophy.

"We feel that the market breadth is broad and there would be more followers, thus leading to the success of the contrarian strategy," said Sridhar.

The scheme will have a three-pronged strategy basing on segments, companies and cycles.

Siddharth Dembi, fund manager of this scheme, said, "Oil is one of the segments attractive for this strategy, provided the outlook on crude oil is positive."

The fund would invest in about 50-55 stocks. The scheme opens on 22nd Feb and closes on March 22.

The fund is likely to deploy money raised in three months with an option to hold 20 per cent cash at any point in time. The fund would invest in about 50-55 stocks.