Morningstar: Mutual Fund Guide

Home »  Magazine »  Morningstar: Mutual Fund Guide
Morningstar: Mutual Fund Guide
Morningstar: Mutual Fund Guide
Morningstar India - 29 August 2021

SBI Dynamic Bond Fund

Investment Strategy

The experienced team behind SBI Dynamic Bond is well-resourced to manage the flexible mandate of this strategy. Dinesh Ahuja has been the lead portfolio manager of this fund since February 2011 and has a total experience of more than 20 years. He comes across as a skilled and experienced manager and has helped the fund build an impressive track record during his tenure.

The fund is driven by a flexible mandate to move across the segment with an active-duration strategy. It employs a bottom-up investment approach with a top-down overlay to generate superior risk-adjusted returns. A top-down approach guides portfolio positioning around the predetermined risk parameters by assessing gross domestic product/ inflation, monetary/fiscal policy, interest rate, liquidity, yield curve, credit spread, and so on, while the intensive bottom-up credit research uses an in-house model for security selection. The managers use various qualitative and quantitative parameters and put a lot of emphasis on the company’s management, business, and financial health. They also use the analysis of sell-side research and credit rating agencies to form a view on the creditworthiness of companies, but to a limited extent. The credit committee then reviews the rated securities, and the approved securities are assigned credit and tenor limits. The risk-management team also periodically reviews the portfolio to ensure that the portfolio managers adhere to the guidelines.

The portfolio is constructed purely based on the underlying instrument’s liquidity. Lower credit bets are avoided. There has been intermittent volatility, but his strategy of sticking to his view and evaluating the portfolio on a continuous basis has helped the fund over the long haul.

UTI Mastershare Unit Fund

Manager Biography And Fund Strategy

UTI Mastershare is a conservatively managed fund with an impressive track record of 33 years across all market cycles. Swati Kulkarni, who has been associated with UTI AMC for the past 28 years, and at the fund’s helm since 2006, building a solid track record. She is aided by a competent and a large investment team.

UTI Mastershare Unit is a largecap-focused fund with a growth style. Swati Kulkarni invests predominantly in reasonably priced leading businesses of large-caps from the benchmark index, the BSE 100. The fund takes a top-down approach for sector weights and uses a bottom-up view for stock selection. The initial investment process is to determine which companies have generated higher operating profits and demonstrated a long-term return on equity. From a qualitative aspect, the focus is on strong management, the company’s business model, and competitive advantages. Kulkarni relies on relative valuations for evaluating stocks, deploying measures such as price/earnings, price/book value, and EV/EBITDA, though she also invests in stocks that she considers to be fairly valued if she is convinced about their earnings growth or in her quest for a quality business. She does not drastically move away from the benchmark and at the same time also takes active calls on benchmarks, sectors, and stocks.

The fund maintains a diversified portfolio, and, with its buy-and-hold strategy, the portfolio turnover ratio is lower than peers’. Kulkarni is focused mainly on delivering superior risk-adjusted returns versus peers and reducing risk by investing in quality issues with deleveraged balance sheets. This strategy is most likely to succeed in downturns. Its relatively conservative nature can cause it to underperform in market rallies. Nevertheless, her investment style should hold the fund in good stead over the long haul of a full market cycle

Education In New Normal Age
March To Your Goal, Unhindered