The fund is out with its first portfolio disclosure. K-30 is predominantly deployed in equities with 89 per cent exposure to the same. The rest 11 per cent is invested in money market securities. The equity portfolio consists of aggressive growth stocks. The top ten scrips account for 56 per cent of net assets. The top three sector exposures include infotech, fast moving consumer goods and pharma which have been market favourites for about two years now. The three put together account for 68 per centof the portfolio. The infotech sector alone constitutes a third of the portfolio. The fund has a 14 per cent exposure to Infosys Technologies. As the fund manager rightly puts it - Infosys has grown at a scorching pace and moved into a different plane with the ADR issue taking off at a premium.

Other stocks in the portfolio like HLL and Nestle hold potential for steady growth. The fund also holds a number of pharma scrips, the outlook for which is equally bright. The fund has been a great beneficiary of market timing. That the fund formulated its portfolio at a time when the market was at its low (BSE Sensex was at 2976 on the date of launch) has worked in favour of the fund. K-30 has kicked-off on a positive note and with growth stocks still dominating the market, the fund is likely to continue its stellar performance.

Master Index Fund trails behind Sensex

The post-budget rally in the the stock market has finally resulted in some gains for the index investors. The net asset value of UTI'sMaster Index Fund has moved up from Rs 10.47 as on 27 February to Rs 11.3 as on March 10 - a gain of 7.93 per cent. As against this, the benchmark index has appreciated 10.11 from 3399 to 3743 during the same period. Master Index Fund has been unable to match returns from the benchmark and has trailed behind with a wide margin of 2.18 per cent.

Master Index Fund is sold at NAV but the repurchase is at a discount of around 3 per cent to the NAV. A 3 per cent exit load would suggest that, the sensex will have to appreciate over 3 per cent to provide a positive return to the investor. Considering a Sensex level of 3300, the index will have to gain 99 points for the investor to break-even.

Index funds are essentially those which try to replicate the market index. An index fund is formulated in such a fashion that it carries the same stocks as the index and in the same proportion. Hence, the rate of return on the portfolio is very close to the the rate of return on index. As the rate of return achieved by thefund closely represents that of a given index, these may be the best vehicle to beat inflation in the long run. However, index funds should ideally be no-load funds - bought and sold at NAV, so that investors can take advantage of the any short-term market rally such as the recent post-budget bull phase. With the 3 per cent exit load and a 2 per cent tracking error, the fund does not offer any short-term opportunity. Nevertheless, the fund is suitable for investors seeking equity exposure with average gains. --Value Research