UTI Small Cap Fund - Assets, Strategy, Holdings

Contents Summary

Introduction

UTI Small Cap Fund Regular Plan is an Open-ended Small Cap Equity scheme launched by UTI Mutual Fund House on Dec 22, 2020. This fund has been in existence for 9 months and has Rs. 1,624 Crores are worth of Assets Under Management (AUM).

The fund has an expense ratio that is less than what most other Small Cap funds charge. The majority of the fund’s money is invested in the Services, Healthcare, Construction, Chemicals, Engineering sectors. It has taken less exposure in the Services, Healthcare sectors compared to other funds in the category. The top 5 holdings of this fund are in JB Chemicals & Pharmaceuticals Ltd, Coforge Ltd, Timken India Ltd, eClerx Services Ltd, Brigade Enterprises Ltd.

Fund manager of UTI Small Cap Fund

UTI Small Cap Fund is currently being managed by Mr. Ankit Agarwal. He is a degreed engineer in Computer Science and Engineering, Economics Management, PGDM Finance.

Before joining UTI Mutual Fund he worked with Centrum Capital Ltd as Senior Vice President (Fund Manager), Wealth and Investment Management at Barclays as Asst Vice President, Lehman Brothers London as Senior analyst, BNP Paribas, and D. E. Shaw & Co.

Investment strategy of UTI Small Cap Fund

1. The main investment objective of the fund is to seek to generate long-term capital appreciation by investing predominantly in equity and equity-related securities of small-cap companies.

2. It is benchmarked against the NIFTY Small Cap 250 Total Return Index.

Key highlights

1. As of Sept 2021 the Net Asset Value (NAV) of the UTI Small Cap Fund Regular Plan is Rs. 14.07 for the Growth option of its Regular plan.

2. The trailing returns over different periods areas 39.46% (since launch). Whereas, Category returns for the same time duration are 84.45%(1 year), 17.63%(3 years), and 16.52% (5year).

3. The UTI Small Cap Fund Regular Plan currently holds Assets Under Management worth Rs. 1624 Crore.

4. The expense ratio of the fund is 2.31% for the Regular plan.

5. UTI Small Cap Fund Regular Plan shall attract an Exit Load of 1% if redeemed within one year.

Asset allocation of UTI Small Cap Fund

1. The asset allocation of the fund comprises around 97.67% investment in Indian stocks of which 6.14% is in mid-cap stocks, 73.54% in small-cap stocks, 0.02% in equity, and 2.27% in cash & cash equivalents.

2. While the top 10 equity holdings comprise around 21.12% and the top 3 sectors combine around 38.89% of the assets.

3. The fund largely follows a Growth-oriented style of investing and invests across market capitalizations around 0.0% in large-cap companies, 50.31% in mid-cap, and 49.69% in small-cap companies.

Top holdings by share

JB Chemicals & Pharmaceuticals Ltd – 2.56%.
Coforge Ltd – 2.4%.
Timken India Ltd – 2.15%.
eClerx Services Ltd – 2.09%.
Brigade Enterprises Ltd – 2.05%.
Prince Pipes & Fittings Ltd. – 2.02%.
Aarti Industries Ltd. – 1.99%.
Can Fin Homes Ltd. – 1.99%.
Computer Age Management Services Ltd. – 1.98%.
APL Apollo Tubes Ltd. – 1.85%.
Eris Lifesciences Ltd. – 1.84%.

Basics

Current NAV as of Sept, 2021 – Rs. 14.04.
Growth – Rs. 14.07
IDCW – Rs. 14.07
Return since launch on Dec, 2020 – 40.72%.
Benchmark – Nifty small cap 250 TRI.
Type – open ended.
Risk – very high.
Assets – 1624 Crores.
Expense ratio – 2.31%.

Minimum investment – Rs. 5000.
Minimum additional investment – Rs. 1000.
Minimum SIP Investment – Rs. 500.
Minimum Lumpsum investment – Rs. 5000.
Lock in the period – not applicable.
Exit load – 1% for redemption within 365 days.

Tax implications

1. Gains are taxed at a rate of 15% (Short term Capital Gain Tax or STCG) if units are redeemed within 1 year of investment.

2. If units redeemed after 1 year of investment for gains of upto Rs. 1 lakh accruing from those units in a financial year shall be exempted from tax.

3. Gains of more than Rs. 1 lakh will be taxed at a rate of 10% (Long term Capital Gain Tax or LTCG).

4. For Dividend Distribution Tax, the dividend income from this fund will get added to the income and taxed according to the investor’s respective tax slabs.

5. Also for dividend income above Rs 5,000 in a financial year, the fund house shall deduct a TDS of 10% on such income.

Peer comparison with other small-cap funds

Axis Small Cap Fund – 28.39%.
Nippon India Small Cap Fund – 21.39%.
Kotak Small Cap Fund – 28.25%.
SBI Small Cap Fund – 21.13%.

Who should invest in UTI Small Cap Fund

If invested for 7 years or more, the expected gains could comfortably beat the inflation rate as well as returns from fixed income options. This fund invests in smaller companies, so, compared to invest in larger companies, such funds like UTI tend to fall more when stock prices fall. As higher returns in the long term are expected, there will be ups and downs along the way as well. Like for all equity funds, one must invest through the SIP route.

It is not advisable to invest in any other small-cap fund if need to redeem investment in less than 7 years. Investors who are looking to invest for at least 3-4 years and looking for very high returns, need to keep in mind that investors should also be prepared for the possibility of higher losses in case of market falls.