UTI Mutual Fund (UTI) has launched an open-ended equity scheme, UTI Quant Fund, that follows a sophisticated quantitative investment strategy.
The active equity fund, which combines predictive modelling with UTI’s extensive investment research expertise and investment process, aims to consistently generate alpha over the broad index by dynamically adapting to market conditions and managing volatility, UTI Mutual Fund said in a statement.
The UTI Mutual Fund’s new fund offer (NFO) will be available for subscription from January 2-16, 2025.
UTI Mutual Fund investment approach:
The fund employs a Factor Allocation Model to dynamically assign weights to four key factors — Momentum, Quality, Low Volatility, and Value — with the goal of generating alpha over the benchmark. These factors not only represent distinct strategies but also synergize to create a balanced and adaptive investment approach, the MF house said.
Also read: SBI Mutual Fund: Rs 10000 SIP in this SBI fund turns into a whopping 98.54 lakh in 19 years!
Key highlights of UTI Quant Fund:
1. Factor-Based Investing Strategy:
The UTI Quant Fund uses a Factor Allocation Model to dynamically allocate weights to factors that are expected to do well in the near future:
Value: Focuses on undervalued stocks based on financial metrics like P/E, P/B, P/s, dividend yield, etc.
Momentum: Capitalizes on stocks with strong recent performance, with the expectations that the trend will continue.
Quality: Prioritizes companies with solid fundamentals, including high profitability and low debt.
Low Volatility: Seeks stocks with less price fluctuation, offering more stability during market fluctuations.
2. Flexibility and Adaptability:
Unlike traditional investing methods, the Fund Allocation Model dynamically adjusts factor based on evolving market conditions. This dynamic approach allows the portfolio to adapt to changing market cycles, helping to capture opportunities while managing risk.
Performance Across Market Cycles:
The back tested performance of the Factor Allocation Model demonstrated resilience during market downturns and strong returns during uptrends. This balance of risk and return has made the fund an appealing option for those seeking potential returns across varying market conditions.
4. Risk Management & Prudential Norms:
Sector Allocation: Capped at 40% of the portfolio or benchmark plus 20%.
Stock Allocation: For stocks forming part of Benchmark Higher of 10% or benchmark weight Stocks not forming part of Benchmark: Maximum 5%
Top 10 Holdings: The combined weight of the top 10 holdings is capped at 60% of the portfolio,
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