Multibagger Mutual Fund : UTI Nifty Next 50 Index Fund :If a mutual fund scheme multiplies the investors’ money more than 3 times in just 5 years, then it will be called a multibagger. One such scheme is UTI Nifty Next 50 Index Fund, which has made its investors rich in the last 5 years. This scheme, which gives great returns, is an open-ended equity mutual fund and tracks the Nifty Next 50 Total Return Index (NIFTY Next 50 TRI). This scheme of UTI Mutual Funds (UTI Nifty Next 50 Index Fund) is an index fund. Hence its expense ratio is also very low.
How an initial investment of Rs 3 lakh turned into Rs 12 lakh
Both the regular and direct plans of UTI Nifty Next 50 Index Fund have given excellent returns in the last five years. In the last 5 years, the direct plan of UTI Nifty Next 50 Index Fund has given an average annual return of 23.44% on lump sum investment. Whereas the same scheme has given an annualized return of 28.27% on investment through Systematic Investment Plan (SIP). However, due to the difference in expense ratio, there is some slight difference in their performance. Here we are giving the calculation of both the schemes.
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Return on Investment in 5 Years (Direct Plan)
Scheme Name : UTI Nifty Next 50 Index Fund (Direct)
Lumpsum investment 5 years ago: Rs 3 lakh
Monthly SIP for 5 years: Rs 3000
Average annual return on lump sum investment over 5 years: 23.44%
Annualized return on SIP in 5 years: 28.27%
Investment period: 5 years
Total investment in 5 years: Rs 4,80,000 (Rs 4.80 lakh)
Total value of investment after 5 years: Rs 12,21,854 (Rs 12.21 lakh)
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Performance of the regular plan of the scheme
The average annual return on lump sum investment in the regular plan of UTI Nifty Next 50 Index Fund in the last 5 years has been 27.71% and the annualized return on SIP has been 27.71%. If someone had made a lump sum investment of Rs 3 lakh in the regular plan of the scheme 5 years ago and also invested Rs 3000 every month through SIP, then the current value of his investment would have been Rs 11,97,216 (Rs 11.97 lakh).
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Effect of Expense Ratio
In the above calculation of UTI Nifty Next 50 Index Fund, you must have noticed a slight difference in the returns of the direct and regular plans. Despite being the same scheme, this difference in the returns of both is due to the difference in the expense ratio. The expense ratio of the regular plan is 0.79%, while in the direct plan it is only 0.36%. Due to this difference, despite the investment amount being equal in the above calculation, a difference of Rs 24,638 is seen in the returns. That is, in terms of net return, the direct plan of the scheme is better for investors.
Asset Allocation and Market Cap Weightage
UTI Nifty Next 50 Index Fund is placed in the ‘very high risk’ category according to the riskometer, but its portfolio consists of more than 98% large-cap stocks, which are considered stronger and less risky than midcap and smallcap. If we look at the asset allocation of the scheme, 99.78% of its corpus is invested in equity, while 0.22% of the amount is in cash. In terms of market cap, 98.38% of the scheme’s fund is invested in large cap shares, while 1.62% of the fund is invested in mid-cap shares. This scheme has no investment in small caps.
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Should you invest?
If you want to invest in equity for the long term and have the ability to take risks for better returns, then UTI Nifty Next 50 Index Fund can be a good option for you. The full benefit of investing in equity mutual funds is available only when you are ready to invest money for a long time, i.e. at least for 5 to 7 years. Regular investment in equity funds through SIP is a better strategy to reduce the impact of market fluctuations. The past performance of this fund has been good and if the same trend continues in the future, it can give good returns to investors. However, before investing, do consult your financial advisor and invest keeping in mind your financial goals and risk taking capacity.
