Investment Objective
UTI Small Cap Fund seeks to generate long term capital appreciation by investing primarily in equity and equity related securities of small cap companies.
Investment Strategy
- UTI Small Cap Fund invests 65% to 80% of its investment in small cap companies and residuals in mid cap stocks. The fund does not maintain any exposure to large cap companies.
- The scheme follows a bottom-up approach for stock picking.
- It follows a sector-agnostic investment approach while ensuring prudent diversification across companies.
- Before investing, the fund emphasizes companies’s Operating Cash Flow (OCF) and Return on Capital Employed (RoCE) ratings based on their financials of previous 5 years
- It focuses on identifying good stocks, avoiding poor stocks and being consistent over time.
- It prefers companies having scalable business models and a long growth runway. Such companies are run by seasoned management carrying attributes of cost leverage, product innovation, profitable volume growth and high return on invested capital.
- It retains its flexibility to stay invested in mid caps, which have the potential to become large cap company.
- The fund is open to investing in fundamentally strong companies, which are either experiencing a transitory phase of weakness or going through a transformational change.
- It follows a blend of value and growth styles of investing.
- The fund has set internal allocation limits to ensure diversification. It allocates up to the lower of 35% of its portfolio or benchmark plus 12% in a single sector; up to 5.5% in a single stock; and up to 30% across the top 10 stocks.
- It aims at moderate portfolio churn over the medium to long term.
- The scheme maintains a well-diversified portfolio and follows a patient long term approach towards companies in the portfolio.
Who Should Invest
- Investors having an investment horizon of 5 years and above and seeking to invest in small cap companies.
- Those looking to add a high-risk strategy to balance their overall conservative portfolio.
- Investors having a high risk appetite seeking higher returns compared to other diversified equity funds and willing to tolerate the underlying portfolio volatility associated with small cap funds.