UTI Core Equity Fund is a large and mid cap fund where it offers a diversified investment
portfolio. According to the SEBI categorization of mutual funds, large and mid cap funds invest a
minimum of 35% each in the equity and equity related instruments of large cap and mid cap
companies. The Fund intends to invest in sound companies which provide margin of safety by
trading cheaper, relative to their history or peers. The Fund aims to provide stability with a
biasness towards large cap companies and offers higher growth in the portfolio through
investment in mid and small cap companies.
Value Investing is a strategy that involves picking stocks which are trading at less than their
intrinsic value. Markets often over react to short-term news flow or sentiments which gives the
opportunity to the value investor to buy a stock below its intrinsic value. Buying below the
intrinsic value provides margin of safety, that is the distinguishing feature of value investing. By
purchasing a stock at lower valuations, the value investor increases the odds of making money
or losing less money if the business does not perform as expected or takes longer to perform.
Value investors emphasize on margin of safety over growth and embrace cyclicality and the
potential for mean reversion in business fundamentals and valuation. The value investor makes
money when the stock trades at intrinsic value – capturing the potential for improvement in
business fundamentals and valuations.
The Fund follows a top down approach to pick sectors which are available at below mean
valuations with reasonable prospects. It follows a bottom up approach to pick sound businesses
with reasonable relative valuation, a healthy past track record and potential for future growth
are considered. The core belief of the Fund is that a company goes through its own valuation
cycle which may vary on account of either macro cycles or company specific factors, and its aim
is to capture the inefficiency in the cycle. It would also look towards growth oriented
companies if the valuations are in the comfort zone.
The investment strategy of the Fund is built around three tenets: relative valuation versus
history or peer, growth opportunities at reasonable valuations and mean reversion. The Fund
focuses on quality companies whose relative valuation are below their historical valuation or
valuation of their peers, providing margin of safety. The Fund also looks at growth oriented
stocks which are trading at reasonable valuations. In this regard, small caps can offer the
combination of growth and value as they are not well discovered by the market and good
quality companies could be available at reasonable valuations. The strategy also endeavours to
pick businesses that are undervalued and benefit from mean reversion in profitability and
valuation as the cycles play out.
listing
Information Classification: UTI AMC – Public
UTI Core Equity Fund was launched in the year 2009. The Fund has an AUM of over Rs. 1,925
Crores as of August 31, 2023. The Fund has about 51% invested into Large Caps, 41% in Mid
Caps and the remaining in Small caps as on August 31, 2023. The scheme’s top holding consists
of HDFC Bank Ltd., ICICI Bank Ltd., Infosys Ltd., Federal Bank Ltd., Reliance Industries Ltd., Max
Financial Services Ltd., Mahindra & Mahindra Ltd., Larsen & Toubro Ltd., ITC Ltd., and
Coromandel International Ltd., which accounts for more than 36% of the portfolio’s holdings.
UTI Core Equity Fund is designed for investors who seek exposure to a portfolio of investing in
both large and mid market capitalization stocks with a bias towards relative value style of
investing. The Fund is suitable for investors looking to build their core equity portfolio for long-
term wealth creation.
