'High valuations are rarely a reason to exit stocks'

UTI Equity Fund's one-year return of 25 per cent is way ahead of benchmark and category returns. What has resulted in the outperformance by your fund in the last one year? In terms of sectors, during the last one year, overweight positions in financial services, consumer goods, IT and auto have contributed positively to the outperformance by the fund. As part of our general philosophy, we have stayed clear of businesses that have poor cash flows and a weak growth trajectory and that has helped us significantly in the last few months since the indiscriminate mid-cap rally got punctured. How do you pick stocks for this fund? The fund's stock-selection process is driven by the tenets of quality, growth and valuation. The fund has a higher weightage on industries that exhibit stable and secular growth prospects and an ability to generate high operating cash flows, preferably free cash flows as well. We be

This article was originally published on August 23, 2018.