If you’re interested in investing in India, there are a handful of quality mutual funds available to U.S. investors that focus on this emerging market. But if you’re an investor living in India, you’re probably using Unit Trust of India, or UTI fund, a mutual fund company headquartered in India that offers dozens of mutual funds and exchange-traded funds.
American investors are probably unaware of the UTI Fund. But that lack of awareness could change in 2017.
In fact, now is a good time to do your homework and learn more about this compelling growth story in the mutual fund industry.
Now that China’s incredible growth has slowed, India appears poised to be the next big story in emerging markets. Part of that growth machine comes from capital investment, both from investors inside India and from investors around the world in developed countries. And India has a growing middle class and a government that supports economic development and investment safeguards.
Now enter Unit Trust of India, a significant player in Indian capital markets. Although most U.S. investors are best-suited investing in India through domestic mutual funds, the UTI Asset Management Co. Ltd., or UTI AMC, has an impressive suite of mutual funds available to residents of India and neighboring countries.
Investing in India: Mutual Funds at UTI
UTI Mutual Fund offers dozens of mutual funds, including diversified stock funds, sector funds, tax planning funds, index funds, bond funds, balanced funds and ETFs.
The UTI Mutual Fund website provides details, such as fund objective, fund holdings, management and NAV history for their funds. But the best way to find crucial information in a convenient summary is to look at the fact sheets for their funds.
After scanning through mutual funds at the UTI Fund, here are three sample funds to give you a cross section of offerings:
UTI Equity Fund: With an inception dating back to May 1992, this fund is one of the earliest portfolios managed by UTI. The UTI Equity Fund’s average annualized return since inception, through Dec. 31, 2016, is 11.7%. That’s outstanding for a core stock holding investing in large-cap stocks of Indian firms, such as top holdings HDFC Bank Limited (ADR) (NYSE:HDB) and Infosys Ltd ADR (NYSE:INFY), which stand to benefit from India’s long-term growth prospects.
UTI Banking Sector Fund: UTI offers three mutual funds that focus on industrial sectors. The UTI Banking Sector Fund, which dates back to 2004, benefits from India’s expansion of capital markets and financial instruments in the 1990s and early 2000s. The annualized return since inception is an impressive 16.4%. Top holdings include HDFC Bank and ICICI Bank Ltd (ADR) (NYSE:IBN).
UTI Bond Fund: UTI offers more than a dozen fixed income funds for investors to choose from. The UTI Bond Fund can invest in a wide range of debt and money market instruments, with debt issues averaging intermediate-term. Since the May 1998 inception, UTI Bond Fund has produced an annualized return of 8.9%, which beats most U.S. stock funds during that period.
The UTI Fund in the U.S.
Although investment is widespread in India, mutual funds and ETFs offered by the UTI Fund are not available on U.S. exchanges. Therefore American investors interested in gaining exposure to Indian stocks are wise to consider mutual funds, such as Matthews India Fund Investor Class (MUTF:MINDX) or Eaton Vance Greater India Fund Class A (MUTF:ETGIX).
UTI has such a compelling story and growth prospects that U.S.-based investment management T. Rowe Price was an early major shareholder in the UTI Fund’s managing firm, UTI AMC, with a 26% stake.
It is possible that UTI AMC will go public in 2017.
As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities. His No. 1 holding is his privately held investment advisory firm in Hilton Head Island, SC. Under no circumstances does this information represent a recommendation to buy or sell securities.