Setting a realistic financial goal is the first step towards successful investing. Mutual funds can be explored for meeting financial goals ranging from short-term to long-term, while choosing to invest from a wide-range of products across the asset class. Flexi-cap funds are open-ended equity funds investing at least 65% of total assets in equity assets of companies across different market capitalizations. UTI Flexi Cap Fund is one of the oldest funds in the category (launched in 1992) and has a long-term track record of consistent performance. The Fund has a corpus of over Rs. 24,237 crores and is trusted by over 18.55 lakh investors. This offering from UTI Mutual Fund is suitable for any long-term investor looking for a fund that endeavors to invest in quality businesses having potential for creating economic value for investors.
Quality is the ability of a business to sustain a high Return on Capital Employed (RoCE) or Return on Equity (RoE) over a long period of time. These businesses are able to generate high RoCEs and RoEs even during difficult times and operate above their cost of capital. These strong cash-flows become the source of economic value creation.The Second pillar is Valuation- The fund emphasizes businesses with steady and predictable growth trajectory, rather than cyclical and volatile growth. High quality businesses create economic value, but high growth businesses enable compounding of this value, so the fund’s favorite hunting ground for stock selection is the intersection of quality and growth. The last pillar of the fund’s investment philosophy is “Valuations”.
A Price to Earnings (P/E) multiple is a good starting point, but it is often misunderstood. Before reaching a judgement, one must carefully study the characteristics of each business and establish a fair valuation band. The P/E should be considered in context of RoCE, opportunity to reinvest in the business and free cash flow. UTI Flexi Cap Fund invests across the market capitalization spectrum, with its top ten holdings consisting of LTIMindtree Ltd., ICICI Bank Ltd., Bajaj Finance Ltd., HDFC Bank Ltd., Kotak Mahindra Bank Ltd., Infosys Ltd., Avenue Supermarts Ltd., HDFC Ltd., Info-Edge (India) Ltd., and Coforge Ltd.
