UTI Mutual Funds
After the Unit Trust of India Act, 1963 was revoked, UTI Mutual Fund was formed. UTI Mutual Fund was launched only after the disbandment of Unit Trust of India. It also resulted in portioning Unit Trust of India into two parts, i.e., the UTI Mutual Fund and the Specified Undertaking of the Unit Trust of India (SUUTI). On February 1, 2003, it was registered with SEBI (Securities and Exchange Board of India). The State Bank of India (SBI), the Life Insurance Corporation of India (LIC), the Punjab National Bank, and the Bank of Baroda are the four sponsors of UTI. UTI Trustee Company Private Limited is listed as the trustee.
UTI Value Opportunities Fund
UTI Value Opportunities Fund Direct-Growth is a UTI Mutual Fund Value-Oriented mutual fund programme. This investment has been around for nine years and three months, established on January 1, 2013. As of 31/03/2022, UTI Opportunities Fund Direct-Growth has assets under management (AUM) of 6,615 crores, making it a medium-sized fund in its category. The fund charges a 1.25 percent expense ratio, which is more than most similar Value-Oriented funds. The UTI Opportunities Fund Direct-Growth returns over the last year have been 17.12%. It has returned an average of 13.31% every year since its inception. Every two years, the fund has quadrupled the money put in it.
Investment Objective of UTI
“The plan is to achieve long-term capital appreciation by investing largely in equities and equity-related instruments of companies across the market capitalisation spectrum,” the UTI Opportunities Fund Direct-Growth investment objective states. The NIFTY 500 Total Return Index is used as a benchmark for UTI Mutual Fund.
Allocation of Assets and Composition of Portfolio
Let us look at how UTI Opportunities Fund investment allocates assets and the portfolio composition is done.
- The fund’s asset allocation is roughly 98.45% in equities, 0.18 per cent in bonds, and 1.35 per cent in cash and cash equivalents.
- The top 10 equity investments account for roughly 47.4 per cent of assets, while the top three sectors account for around 50.18 per cent.
- The fund invests in various market capitalisation, with 65.05 per cent in gigantic and big-cap companies, 27.96 per cent in mid-cap, and 6.99 per cent in small-cap stocks.
Implications of Taxes
Let us examine how tax implications are done in UTI Opportunities Fund Direct-Growth.
- If all the units are redeemed within one year of purchase, profits are taxed at a higher rate of 15% (Short-term Capital Gains Tax – STCG).
- Profits up to INR 1 lakh flowing from units sold after one year of investment are free from tax in a financial year.
- Gains of more than Rs. 1 lakh would be subject to a 10% tax rate (Long-term Capital Gain Tax – LTCG).
- The dividend payments from the UTI opportunities fund are added to the investor’s income and taxed in accordance with their Dividend Distribution Tax slabs.
- On dividend revenue of Rs 5,000 in a fiscal year, the fund house must deduct a 10% TDS.
The Equity: Value Oriented funds category includes UTI Value Opportunities Fund – Direct Plan. According to SEBI’s current rules for calculating risk grades, investing mainly in UTI Opportunities Fund Investment Plan falls into the Very High-risk category.
Time of Investment
Investing in the UTI Opportunities Fund Direct-Growth Plan is recommended for at least three years. The advised investment period is the least duration necessary to keep assets in the fund to lower the fund’s downside risk and assure more predictable returns.
Some Important points to remember with respect to UTI Opportunities Fund
- One of the other funds similar to the UTI Opportunities fund is the SBI Nifty Index Fund-Direct.
- The UTI Opportunities Fund Direct-Growth Plan’s current net asset value as of April 28, 2022, is Rs, 104.2549 for the Growth option of its Direct plan.
- It has lagging returns of 21.01 per cent (1 year), 16.85 per cent (3 years), 14.25 per cent (5 years), and 13.3 per cent throughout various periods (since launch). For almost the same period, category returns are 25.3 per cent (1 year), 15.5 per cent (3 years), and 11.91 per cent (5yr).
- As of March 31, 2022, the UTI Opportunities Fund Direct-Growth Plan has assets under management at Rs 6615.19.
- As of February 28, 2022, the fund’s cost ratio for the Direct plan is 1.25 per cent.
- An Exit Load is charged on the UTI Value Opportunities Fund – Direct Plan: “For more than 10% of investments, 1% will be levied if redeemed within one year.”
- A minimum investment of Rs 5000 is required, with an extra Rs 1000. SIP investments start at Rs 500.