Mutual fund option can be explored for meeting financial goals ranging from short-term to long-term, while choosing to invest from wide-range of products across the asset class. Here is one mutual fund product category that investors can look for investing in meeting long-term wealth creation goals. As per the release, Flexi-cap funds are open-ended equity funds investing at least 65% of total assets are invested in equity assets of companies across the different market capitalizations viz., large-cap, mid-cap or small-cap fund. 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. 25,300 crores and trusted by over 18.55 lakh investors (as on May 31, 2023). 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.
UTI Flexi Cap Fund’s investment philosophy is built around the three pillars of Quality, Growth and Valuation. “Quality” signifies 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. “Growth” on the other hand signifies long term secular growth for the business. The fund emphasizes on businesses that have steady and predictable growth trajectory rather than cyclical and volatile growth. Cyclical growth or de-growth can be very sharp and unpredictable and can surprise investors in either directions, as against secular growth where there is relatively more certainty in understanding the long term drivers and hence future outcomes.
Valuations are an important metric as an entry point into a great business and therefore one should very carefully study this before entering a stock. Although a Price to Earnings (P/E) multiple is a good starting point for understanding the valuations of a business but it is also a widely misunderstood valuation technique. The P/E is merely a shorthand metric for the firm's cash flow generation and value creation potential over a long period. More often than not, a high RoCE and high growth business creates more value over the long-term and would hence mathematically deserve a higher P/E
. It would still be an attractive investment for long term investors who invest on the basis of business fundamentals rather than on the basis of what would outperform in the next few months or quarters. UTI Flexi Cap Fund is suitable for those equity investors looking to build their “core” equity portfolio and seeking long term capital growth through investment in quality businesses that generate economic value. Investors with moderate risk-profile and looking to invest for at least 5 to 7 years to meet a long-term financial goal, may consider investing in this fund.
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