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Renewed Focus

With a trimmed portfolio and focus on stock selection, UTI Mastershare is trying to turn its fortunes around. The fund has reaped early gains too, as suggested by its performance this year

One of the first diversified equity funds in India, UTI Mastershare made a lot of money for its initial investors. But over the past decade or so the fund's performance has been just about passable. In spite of a rather lack luster performance, the fund continues to enjoy the patronage of its investors, with assets under management of around Rs 2,000 crore.

The fund maintains a growth oriented portfolio, sticking to large cap stocks and betting on sectors that enjoy an overall consensus. Consequently, the style of investing is to buy and hold stocks. There are no adventurous plays here. Sector calls and stock picks are really nothing to write home about. The portfolio is quite placid with a very low churn in holdings. Historically, the fund has been extensively diversified with the number of stocks being as high as 200-230 (during 2001). But over the past year and a half the fund looks like a lawn mower was let loose on it. Holdings have been severely trimmed and stocks meticulously selected. At the same time, work is far from over, the fund continues to maintain some miniscule holdings that add trifle to the NAV; a case in point is the 300 shares of Pfizer held by the fund.

Nevertheless, the renewed focus has helped the fund reap some early gains. So far this year the fund's performance is looking good, with the year to date return at 17 per cent (As of July 20, 2007) compared to 15.5 per cent for the category.

Such a sedate portfolio management strategy, along with a relatively low standard deviation of returns has placed the fund in the below average risk category. Overall, there is nothing special about the fund. If you are looking for a vanilla large cap oriented diversified equity fund, there is a long list of consistently performing funds to choose from.