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ALTHOUGH, UTI Wealth Builder Fund Series II (UTI WBF-II) has been categorized by the Capitaline NAV India database, which FC used for arriving at the top mutual fund performers, as being an equity multi-cap fund, it is, by original design and in reality, a equity multi-cap fund with an exposure to gold or debt or both. While most equity funds have an asset allocation of 90100 per cent in equities and balance in cash or money-market instruments, UTI WBF-II's asset allocation allows for 65-100 per cent exposure to equities, 0-35 per cent exposure to gold exchange traded funds (ETFs) and 0.35 per cent exposure to debt.
No wonder then, in a year when the broad equity market has taken a harsh beating, the fund has topped in performance in the equity multi-cap catego ry with a negative return of only 1.04 per cent, while all the rest have fallen by much more. The next best equity multi-cap fund performer, for instance, is UTI's own UTI Opportunities Fund, which yielded a negative return of 6.23 per cent. The fund has an asset allocation mandate of 90-100 per cent in equities and 0-10 per cent in money market instruments and debt.
"A large part of this fund's performance has come not only because of stock picking but also because of asset allocation in gold," said Lalit Nambiar, UTI WBF-II's fund manager.
When the fund was launched in November 2008, it was ahead of its time due to its unique asset allocation. The fund has been consistently investing at least 10 per cent in its own UTI Gold ETF. "In fact, when I took over as UTI WBF-II's fund manager from my colleague a few months ago, I raised the fund's gold ETF exposure from about 10 per cent to 23 per cent," Nambiar added.
Since gold prices have risen in the present year, the fund's relatively high gold ETF component has fetched it positive returns and enabled it to give an overall performance that outshines all other equity multi-cap funds whose 0 fund's 10 largest investment in equities were in Hindustan Unilever, HDFC Bank, ITC, HDFC, Grasim Industries, Petronet LNG, GlaxoSmithKline Consumer Healthcare, Bharti Airtel, Dish TV India and State Bank of India.
On that day, the exposure to gold ETF was 16.48 per cent, all of it being in UTI Gold ETF .
UTI WEALTH BUILDER FUND SERIES II t 90 per cent asset allocation in equities would not have provided them the same leeway to avoid equities and the consequent fall in equity markets.
UTI WBF-II's present asset allocation, according to Nambiar, stood at 22.35 per cent in gold ETF , 5.25 per cent in cash and 72.40 per cent in equities.
Investors should continue to monitor the asset allocation of this fund closely.
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