For those of you looking closely at the equity fund performance charts over 1-, 3- and 5-year time frames, UTI Transportation and Logistics Fund would have merited attention. The fund would have found a place in the top five lists in each of the above time periods.
This sector fund, with a majority of its assets in stocks of automobile and auto components, has been successful on two counts:
One, it partly gained from the ‘consumption play’ that took consumption themes to new highs until 2012. Companies that sold cars and two-wheelers, as well as those that rode the rural consumption wave such as tractor manufacturers, all benefited from multiple legs of such a rally.
Two, those segments that depended on ‘economic growth’ and were cyclical plays on the economy – such as commercial vehicles and auto components – also partly benefited over the last 5 years, at least over the period immediately following the 2008 meltdown.
That a seasoned fund manager like Anoop Bhaskar took over the fund few years ago also added impetus to its performance.
The result – the fund delivered a compounded annual return of 31.8% in the last 5 years. That means you would have made close to 4 times your initial investment over this period.
Performance
UTI Transportation and Logistics Fund was, until 2008, called UTI Auto Sector Fund. Its objective and strategy became more broad based post the change in mandate. In these avatars, the fund delivered 16.6 per cent compounded annually since its inception in April 2004 – that is a good 10 years ago.
There are no strict comparisons for this fund as the only other auto sector fund from the JM stable was merged. However, a comparison with the CNX Auto Sector Index (the fund’s benchmark UTI Transportation & Logistics Index is not available in public domain), suggests that while the fund comfortably beat this index over 1-, 2- and 3-year time frames, it just managed to keep pace over a 5-year period and marginally underperformed (by two percentage points) the index since the fund’s inception in 2004.
While the fund comfortably outpaced broad markets since the recovery post 2008, it has not been consistent in beating the CNX Auto Index.
The fund made a mark in this regard in 2013, delivering close to 24% in a year when the Auto Index delivered just 8.5% and the CNX Nifty managed just 5.9%. The fund’s timely call on auto ancillary segments such as batteries and tyres did exceedingly well, in a weak rupee environment. The fund has continued this winning streak in 2014 till date as well.
Portfolio
UTI Transportation & Logistics Fund has stocks outside of the auto sector that still fit the fund’s theme. Stocks in shipping companies such as Great Eastern Shipping, ports such as Gujarat Pipavav Port and Adani Ports and SEZ, infrastructure plays such as Texmaco Rail & Engineering are some of the picks outside of auto. As of March 2014, Maruti Suzuki was the fund’s top stock, accounting for close to 8% of its assets.
The fund was overweight on two-wheeler and auto component plays such as TVS Motor Company, Eicher Motors (Royal Enfield), Wabco India and Amararaja Batteries.
It was slightly underweight on commercial vehicle heavyweights (M&M, Tata Motors, Bajaj Auto) as these segments await an economic recovery to haul them from their current slowdown in volumes.
Suitability
UTI Transportation & Logistics is a high risk fund that also shows high standard deviation in performance, meaning that the fund’s returns can be quite inconsistent. While investors holding the fund can continue with it, fresh investors need to be aware of a few risk factors:
– While the fund could receive a boost from any economic recovery, that it is laden with stocks from a sector that is highly interest rate sensitive makes it a high-risk fund in the current environment.
– While FIIs have traditionally been stable shareholders in automobile companies, their holding in many auto component makers have reached multi-year highs. This makes the sector highly susceptible to any FII activity – especially outflows.
– High exposure to single stocks (albeit at not more than 8% currently) means that any fall in a few stocks could affect fund returns.
A decline in interest rate and cooling of inflation would be key factors to look out – for a sustainable rally in this space.
If you are taking exposure to this space, besides having high risk appetite, you might need the discipline to sweep profits off the table, as the sector is known to easily give up on gains once the cycle turns negative.
Disclaimer: Past returns are not indicative of future performance.
Wealth Conversations – April 2024- Temporary suspension of subscriptions in ” Mirae Asset Global Electric & Autonomous Vehicles ETFs Fund of Fund & Mirae Asset Global X Artificial Intelligence & Technology ETF Fund of Fund
- Merger Announcement: Aditya Birla Sun Life CRISIL IBX AAA Mar 2024 Index Fund
Here is everything that you need to know about Arbitrage Funds- Temporary suspension of subscriptions in “DSP US Treasury Fund of Fund”
the returns generated by the fund is too enticing to fall a prey to its charms .generally as a human being one is likely to succumb to the entreaties.but beware!
I personally thought fundsindia is different than other agents in markets who look for only commission.
I personally own a fundsindia account. And during the first week relationship manager kept on calling me to do my first investment. He claimed himself as certified financial planner.
I asked him a simple question. What is the tax liability of equity/debt purchase and sell.
He plainly said he don’t know about that and will ask someone and reply me in 1 day. As a CFP he should know this basic stuff. After that I did a small purchase as i wanted to do (my decision) through fundsindia platform and added his name during the purchase process. Its been around 2 weeks now I never heard back from him. DO you have any kind reward program if you make customer to do their first investment? May be that could be the reason he was behind me till i make first investment and after he absconded. So I have decided not to continue with fundsindia. Good that I got to know about your service so soon.
Hello Sir,
Thanks for writing to us here. I head mutual fund research at FundsIndia and saw your comment on my blog post.
First, we apologise for your experience. We shall enquire into this and get an advisor to contact you and solve your query. On your comment on reward programme, let me assure you that there is no such practice nor policy of reward for the advisor based on first investment. Our endeavor is to provide advisory support to all our investors on an ongoing basis. The first call made to new investors is to help them plan or help them with transacting on a new platform. On an ongoing basis, we have an ‘advisory support’ system (something that is not available in other places) which allows you to raise a ticket through your account (under the help tab) and post your query or request for a call back briefly stating your requirement. This is a value add service we do to ensure that we provide support customers not just at the time of investing but through the life of his/her goals. We hope to serve you better. I am mailing you separately to gather some details from you. Thanks & regards, Vidya
I have been investing with FundsIndia for over an year and never had any bad experience. In fact, I have referred this platform to friends of mine. Please do not judge the services of this platform from one incident. FundsIndia provides very good advises and will always help with your queries. Happy investing!
Santosh,
Thanks for that! We hope to constantly improve our service quality. thanks, Vidya
Hello Vidya,
I’m seeking some advice from you guys regarding further investment I want to do using FundsIndia platform. Unfortunately, didn’t get any reply back so thought of requesting you here for your advice.
I’m planning to make a SIP investment portfolio for a time frame of 6-7 years. I’m a moderate risk taker and I can invest monthly Rs.5.5 – 6K. I’m looking for a return about 10-11lak after 7 years. This is precisely my goal.
After researching, I figured out a few funds which seems like performing well for last 5 odd years. I’m listing them below kindly give your feedback. Thanks in advance.
1>ICICI pru focussed blue chip equity – Regular (G) – Large Cap [Investment amount: 1500/-]
2>ICICI Prudential Dynamic Fund – Institutional I Plan(G) – Large and Mid cap[Investment amount: 1500/-] this fund I couldn’t find in fundsindia though
3>UTI Transportation & Logistics Fund(G) – Diversified [Investment amount: 1000/-]
4>HDFC Prudence Fund (G) – Balanced- Hybrid [Investment amount: 1500/-]
5>ICICI Pru Long Term Plan-Reg(G) – Debt-Income [Investment amount: 500/-]
Regards,
Subhadeep
Hello Subhadeep,
Thanks for writing to us. I am sorry you could not touch base with us. In future, all you have to do is use the help tab in your account and click advisor appointment. The same will be raised as a ticket and it will definitely be attended to by our advisors on working days. Second saturdays are off. I am now raising this query as a ticket and responding to it myself (as it helps us keep tab of investor requirements better, than a blog which is more of a discussion forum). Pl. expect a reply in a while. thanks, Vidya
Hi Vidya ji,
I have one SIP in HDFC Top 200 of Rs. 5000/m, 5000/m in Reliance Gold Savings Fund (G). Around 20k/m I invest in bank RD. I want to invest 10000/m more in SIP. Any suggesstion whether to decrease RD amount and invest it somewhere else? Could you please suggest me some good MF. I have long term goals of 25-30 yrs?
Hello Chandra PRkash, Portfolio spcific queries can be answered by us for investors on the platform. If you are an investor, pl. use the advisor feature in the help tab with your query and we will get back to you. thanks, Vidya
Hi Vidya Bala
Do you still recomment this fund as it is 2015 Feb and the post was published in d mid of 2014.
pl guide as I m planning to buy this particular fund seeing its track record.
thanks in advance
amit
Hi Amit, we did not ‘recommend’ the fund in 2014. It was only a review. We do not have a call on the fund as we view it to be extremely sector focused and risky; although delivered well. thanks, Vidya
the returns generated by the fund is too enticing to fall a prey to its charms .generally as a human being one is likely to succumb to the entreaties.but beware!
I personally thought fundsindia is different than other agents in markets who look for only commission.
I personally own a fundsindia account. And during the first week relationship manager kept on calling me to do my first investment. He claimed himself as certified financial planner.
I asked him a simple question. What is the tax liability of equity/debt purchase and sell.
He plainly said he don’t know about that and will ask someone and reply me in 1 day. As a CFP he should know this basic stuff. After that I did a small purchase as i wanted to do (my decision) through fundsindia platform and added his name during the purchase process. Its been around 2 weeks now I never heard back from him. DO you have any kind reward program if you make customer to do their first investment? May be that could be the reason he was behind me till i make first investment and after he absconded. So I have decided not to continue with fundsindia. Good that I got to know about your service so soon.
Hello Sir,
Thanks for writing to us here. I head mutual fund research at FundsIndia and saw your comment on my blog post.
First, we apologise for your experience. We shall enquire into this and get an advisor to contact you and solve your query. On your comment on reward programme, let me assure you that there is no such practice nor policy of reward for the advisor based on first investment. Our endeavor is to provide advisory support to all our investors on an ongoing basis. The first call made to new investors is to help them plan or help them with transacting on a new platform. On an ongoing basis, we have an ‘advisory support’ system (something that is not available in other places) which allows you to raise a ticket through your account (under the help tab) and post your query or request for a call back briefly stating your requirement. This is a value add service we do to ensure that we provide support customers not just at the time of investing but through the life of his/her goals. We hope to serve you better. I am mailing you separately to gather some details from you. Thanks & regards, Vidya
I have been investing with FundsIndia for over an year and never had any bad experience. In fact, I have referred this platform to friends of mine. Please do not judge the services of this platform from one incident. FundsIndia provides very good advises and will always help with your queries. Happy investing!
Santosh,
Thanks for that! We hope to constantly improve our service quality. thanks, Vidya
Hello Vidya,
I’m seeking some advice from you guys regarding further investment I want to do using FundsIndia platform. Unfortunately, didn’t get any reply back so thought of requesting you here for your advice.
I’m planning to make a SIP investment portfolio for a time frame of 6-7 years. I’m a moderate risk taker and I can invest monthly Rs.5.5 – 6K. I’m looking for a return about 10-11lak after 7 years. This is precisely my goal.
After researching, I figured out a few funds which seems like performing well for last 5 odd years. I’m listing them below kindly give your feedback. Thanks in advance.
1>ICICI pru focussed blue chip equity – Regular (G) – Large Cap [Investment amount: 1500/-]
2>ICICI Prudential Dynamic Fund – Institutional I Plan(G) – Large and Mid cap[Investment amount: 1500/-] this fund I couldn’t find in fundsindia though
3>UTI Transportation & Logistics Fund(G) – Diversified [Investment amount: 1000/-]
4>HDFC Prudence Fund (G) – Balanced- Hybrid [Investment amount: 1500/-]
5>ICICI Pru Long Term Plan-Reg(G) – Debt-Income [Investment amount: 500/-]
Regards,
Subhadeep
Hello Subhadeep,
Thanks for writing to us. I am sorry you could not touch base with us. In future, all you have to do is use the help tab in your account and click advisor appointment. The same will be raised as a ticket and it will definitely be attended to by our advisors on working days. Second saturdays are off. I am now raising this query as a ticket and responding to it myself (as it helps us keep tab of investor requirements better, than a blog which is more of a discussion forum). Pl. expect a reply in a while. thanks, Vidya
Hi Vidya ji,
I have one SIP in HDFC Top 200 of Rs. 5000/m, 5000/m in Reliance Gold Savings Fund (G). Around 20k/m I invest in bank RD. I want to invest 10000/m more in SIP. Any suggesstion whether to decrease RD amount and invest it somewhere else? Could you please suggest me some good MF. I have long term goals of 25-30 yrs?
Hello Chandra PRkash, Portfolio spcific queries can be answered by us for investors on the platform. If you are an investor, pl. use the advisor feature in the help tab with your query and we will get back to you. thanks, Vidya
Hi Vidya Bala
Do you still recomment this fund as it is 2015 Feb and the post was published in d mid of 2014.
pl guide as I m planning to buy this particular fund seeing its track record.
thanks in advance
amit
Hi Amit, we did not ‘recommend’ the fund in 2014. It was only a review. We do not have a call on the fund as we view it to be extremely sector focused and risky; although delivered well. thanks, Vidya