UTI Value Mutual Fund is a popular choice among Indian investors, focusing on value investing to achieve long-term capital growth.
Value Investing concept was introduced by Benjamin Graham (Professor of Warren Buffett). In Value Investing, an individual invests in stocks that are below their ‘intrinsic value’. In simple terms, it means, investing in a business that is below the value that it is truly worth.
In the case of UTI Value Fund, the fund manager follows a disciplined approach by selecting undervalued stocks with high potential for price appreciation, aiming to unlock value over time as these companies grow and expand.
This strategy aligns with long-term investors looking for stable growth without excessive risk. If your horizon is less than 5-7 years, this fund is not suited for you.
Key Pros of UTI Value Fund:
Value-Oriented Strategy: The fund’s approach to identifying undervalued stocks enables it to capture growth potential while lowering excessive market risk.
Experienced Fund Management: Managed by seasoned professionals, the fund has demonstrated resilience and expertise in navigating market cycles.
Diversified Portfolio: The fund is diversified across sectors, reducing concentration risk and offering broader exposure to the market.
Key Cons of UTI Value Fund:
Value Cyclicality: Value stocks can underperform during certain market cycles, especially during high-growth or speculative phases, which may affect returns in the short term.
Lower Returns in Bull Markets: While it provides stability, the fund might lag behind during bull markets, as growth-oriented funds often outperform during such periods.
Potential for Volatility: As the fund includes stocks that are undervalued, they may be inherently volatile, requiring investors to have a long-term perspective.
Summary:
As of the latest data, the fund’s portfolio is heavily invested in sectors like Financial Services, which form the largest share of its investments.
Historically, UTI Value Mutual Fund’s Price-to-Earnings (PE) ratio has remained within a moderate range, balancing between fair valuation and growth opportunities. Currently, its PE ratio hovers below 25.
Also, the annualized returns since the fund inception(July 2005) is ~16%
For those seeking steady growth with a disciplined value approach, UTI Value Mutual Fund can be a worthy consideration.
However, investors should weigh its pros and cons in line with their risk appetite and investment horizon.
Kindly note this is not a recommendation. Consult with a financial advisor or mutual fund distributor or do your own research before investing.
Hope you find this helps
Happy Investing and God Bless!
About the Post Author:
The Author is an AMFI registered Mutual Fund Distributor (ARN-262589). Reach out to him via email: edteficonsult@gmail.com
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