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UTI Dividend Yield Fund Regular Plan Growth
Morningstar's Take
|06/07/2021

by Nehal Meshram

UTI Dividend Yield leverages a strong research team with a robust process to deliver returns with limited volatility, making it a competitive offering. Our confidence stems from the presence of the manager, Swati Kulkarni, who has been associated with UTI AMC for the past 28 years, and as a portfolio manager since June 2004. She has been at the fund’s helm since December 2005, building a solid track record of the funds she manages. She is aided by a large and competent investment team, and we are optimistic with Vetri Subramaniam's oversight as the head of equity.The fund has scaled up to become the largest dividend-yield fund. As it has grown bigger in size, the fund appears to have transitioned from large-cap to multi-cap by increasing its allocation to the mid-cap segment over the last two years. When choosing stocks in the portfolio, Kulkarni looks at the Nifty Dividend Opportunities 50 Index, following which the fund has increased exposure to high-dividend stocks. But dividend payout history is just the initial mathematical screen. She also looks at stocks that are available at a fair price with robust balance sheets. Kulkarni largely relies on relative-valuation techniques (peer group and historical valuation) when evaluating companies. She pays heed to the top-down approach, taking sector bets based on the fund house’s view, with a market sentiment overlay. Overall, we are impressed with Kulkarni’s disciplined approach and fine execution across various market conditions. Investors should note that she is focused mainly on delivering superior risk-adjusted returns against peers and reducing risk by investing in quality issues with deleveraged balance sheets. Such a strategy is most likely to succeed in downturns. Its relatively conservative nature can cause it to underperform in market rallies. Nevertheless, her investment style will hold the fund in good stead over a full market cycle. We reiterate our Morningstar Analyst Rating of Bronze for all the share classes.

Morningstar Analyst Rating™
Bronze
Portfolio Role
Swati Kulkarni’s quality bias makes this an appropriate core holding in an investment portfolio.
Executive Summary
People: A seasoned manager backed by a large team that has witnessed different market cycles.
Parent: UTI has strong backing from T. Rowe Price and has shown improvement in its investment practices.
Process: Kulkarni plies relative valuation techniques with high dividend yields when choosing stocks.
Performance: The fund has been an impressive performer on the risk-adjusted return front under Kulkarni.