Union Flexi Cap Fund Payout of Income Distribution cum capital withdrawal INF582M01120

Union Flexi Cap earns an Average Process Pillar rating.

The main driver of the rating is the firm's retention rate of the firm's portfolio managers, which is 83% over the timeframe for which data is available, up to five years. The size of the portfolio management team also supports the rating. With two portfolio managers, the fund is reasonably well-resourced. However, the process is limited by the parent firm's five-year risk-adjusted success ratio of 30%. The measure indicates the percentage of a firm's funds that have outperformed their respective category's median return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup.

This strategy has more exposure to the Growth factor than the Flexi Cap Morningstar Category average. But in terms of size exposure, it is similar to the average. Examining additional factor exposure, this strategy has continually had exposure to high-momentum stocks compared with Morningstar Category peers in the last few years. Momentum strategies wager that market outperformers will continue to outperform, and laggards will continue to lag. Higher exposure to the former could mean the managers are overweighting stocks on winning streaks. In recent months, the strategy was more exposed to the Momentum factor compared with its Morningstar Category peers as well. The managers have also tended to underweight yield compared with peers during recent years. This is demonstrated by the portfolio's low exposure to dividends or buybacks. While companies with high yields provide consistent income payments, they may cut payouts if their earnings fall. In the most recent month, however, the fund's Yield exposure was in line with the Morningstar Category average. In addition, this strategy has constantly held more illiquid stocks, evidenced by holdings' low trading volume, resulting in higher liquidity risk exposure than peers. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. In recent months, the strategy also had less Liquidity factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio is overweight in industrials by 2.6 percentage points in terms of assets compared with the category average, and its energy allocation is similar to the category. The sectors with low exposure compared with category peers are consumer cyclical and financial services, underweight the average by 3.4 and 2.9 percentage points of assets, respectively. The strategy owns 72 securities and is diversified among those holdings. In its most recent portfolio, 37.4% of the strategy's assets were concentrated in the top 10 fund holdings, compared to the category’s 39.9% average.