Union MF is celebrating anniversaries of 3 key funds this month: Retirement Fund (3 yrs), Innovation & Opportunities Fund (2 yrs) and Multi Asset Allocation Fund (1 yr).
The fund house also launched its Equity All Cap Diversified FoF earlier this month – marking the 4th consecutive year with September fund launches.
Its Retirement Fund has delivered a healthy 17% CAGR over 3 yrs, beating Nifty500’s 15% CAGR over the same period. A pure equity fund with a flexicap mandate, it leans a bit more into mid and small caps (typically40-45%) in an effort to generate higher alpha over the long term – a luxury this fund has given the longer term mandate and lock in period of 5 years.
Its Innovation & Opportunities Fund has generated an impressive 22% CAGR over the last 2 years, delivering an alpha of 6% over Nifty500TRI.
Sanjay says the key to investing into innovators and disruptors is to avoid growth traps – businesses that look promising but then fail on execution / scale up for different reasons.
When you side-step growth traps, you next confront valuation traps – stocks that are so richly valued that the underlying growth assumptions start looking very stretched.
The fund seems to have navigated both these traps reasonably well in its first 2 years with allocations across diverse sectors and “newness” being the common factor that brings them all into one fund.
Its Multi Asset Allocation Fund has completed its first year with a healthy 9% return – which is commendable in a year where equity markets delivered no returns, putting a strain on a portfolio with 60% net equity allocation.
The fund’s 20% allocation to precious metals did most of the heavy lifting, delivering a 50%+ return – underlining once again the benefits of diversifying across asset classes.
Sanjay’s team increased silver exposure to 9% of portfolio (out of 20% in precious metals) a few months back – a move that’s working well with silver outpacing gold handsomely in recent months.
Sanjay expects equity to perform well going forward after a difficult year – which should help drive the fund’s returns going forward.
Precious metals (scarcity assets) remain well bid from institutional investors and now retail investors as well. Flows are all important when tracking scarcity assets and as long as demand continues to outstrip supply, precious metals are in a good position.