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UTI Flexi Cap Fund – A flexi-cap portfolio with emphasis on business sustainability creating wealth since 1992

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Salem : Setting a realistic financial goal is the first-step towards successful investing for any investor. While looking for an investment option which can consistently reward you is important, it is equally important to understand the risk associated with it to aim for an optimal outcome in the long-term. Mutual fund option can be explored for meeting financial goals ranging from short-term to long-term, while choosing to invest from wide-range of products across the asset class. Here is one mutual fund product category that investors can look for investing in meeting long-term wealth creation goals. Flexi-cap funds are open-ended equity funds investing at least 65% of total assets are invested in equity assets of companies across the different market capitalizations viz., large-cap, mid-cap or small-cap fund. UTI Flexi Cap Fund is one of the oldest funds in the category (launched in 1992) and has a long-term track record of consistent performance. The Fund has a corpus of over Rs. 25,822 crores (as on July 31, 2023). This offering from UTI Mutual Fund is suitable for any long-term investor looking for a fund that endeavors to invest in quality businesses having potential for creating economic value for investors.

UTI Flexi Cap Fund’s investment philosophy is built around the three pillars of Quality, Growth and Valuation. The portfolio strategy would be to focus on businesses that have an ability to show strong growth for a long period of time and are run by seasoned managements.

“Quality” signifies the ability of a business to sustain a high Return on Capital Employed (RoCE) or Return on Equity (RoE) over a long period of time. Truly high quality businesses are those that are able to generate high RoCEs and also RoEs even during difficult times for their respective industries or sectors and therefore operate above their cost of capital at all times. More often than not, a business with a high RoCE/ RoE shall be able to generate strong cash-flows and these strong cash flows become the source of economic value creation.

“Growth” on the other hand signifies long term secular growth for the business. The fund emphasizes on businesses that have steady and predictable growth trajectory rather than cyclical and volatile growth. Cyclical growth or de-growth can be very sharp and unpredictable and can surprise investors in either directions, as against secular growth where there is relatively more certainty in understanding the long term drivers and hence future outcomes. While high quality businesses create economic value, a high growth business enables compounding of this economic value. It is for this reason that the fund’s favorite hunting ground for stock selection is the intersection of quality and growth

The Fund invests across the market capitalization spectrum following the “Growth” style of investment. The scheme’s top ten holding consists of HDFC Bank Ltd., ICICI Bank Ltd., LTIMindtree Ltd., Bajaj Finance Ltd., Infosys Ltd., Kotak Mahindra Bank Ltd., Avenue Supermarts Ltd., Info-Edge (India) Ltd., Astral Ltd. and Coforge Ltd., which account for around 45% of the portfolio’s corpus as of July 31, 2023.

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