Why Should You Invest in UTI Opportunities Fund?

Some of the top financial consultants advocate for investing in the UTI Opportunities Fund, a fund known for its focus on businesses with undervalued growth potential and cyclically challenged companies. This fund’s flexibility in operating across the market cap spectrum makes it an intriguing investment option for investors ready to take on higher risks in pursuit of potentially greater returns.

Characteristics of the UTI Opportunities Fund

The UTI Opportunities Fund is a highly risky investment, making it suitable for investors who understand the complexities of the macro trends and are willing to take selective bets for higher returns compared to other equity funds. However, it’s important to be prepared for moderate to high losses, even in a favorable market environment.

Portfolio Composition

The fund’s portfolio is structured as follows:

Domestic Equity: 98.08% Large Cap Stocks: 51.52% Mid Cap Stocks: 14.26% Small Cap Stocks: 11.09% Debt Govt Securities: 0.15%

Given its focus on domestic equity, the fund has a higher exposure to markets within India, as reflected in its domestic equity allocation.

Performance Highlights

Despite its high-risk profile, the UTI Opportunities Fund has shown mixed performance. Over the past year, the scheme has returned 4.42%, below the category average of 6.02%. The fund’s expense ratio is notably high at 1.88%, which can eat into returns and affect overall performance.

The fund’s returns are highly volatile, with a standard deviation of 20.7 and a beta of 0.94, indicating considerable fluctuation around the overall market. However, the fund has managed to provide higher returns compared to the level of risk it has taken, with an Alpha of 2.03 compared to the average of 1.11.

Additionally, the fund has shown particular interest in the banking, pharma, and IT sectors, which currently face market challenges. This focus, however, could limit potential returns in the short term, as these sectors are at a bear phase.

Alternative Options

While the UTI Opportunities Fund might appeal to seasoned investors for its potential for high returns, there are other options available in the market. For instance, the ICICI Prudential Value Discovery Fund - Direct Plan - Growth is a strong alternative with better returns ratings and a lower expense ratio, making it a more balanced option for investors seeking growth with a lower risk profile.

Investing in such high-risk funds should always be done with caution, and it’s highly recommended that investors consult with their financial advisors for tailored investment decisions.

Conclusion

Investing in UTI Opportunities Fund should be a strategic decision based on your risk tolerance and investment goals. While it offers the potential for higher returns, it comes with corresponding risks and volatility. Carefully consider your investment horizon and your comfort level with high-risk investments before making a decision.