UTI declares 13.75% dividend for US-64 - Views on News from Equitymaster

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UTI declares 13.75% dividend for US-64

Jul 3, 2000

UTIís results for financial year ending 30th June 2000 were very encouraging with net sales higher by 54% to Rs 42.7 bn. Another bit of encouraging news for US-64 investors was the declaration of 13.75% dividend (Rs 1.375) The Unit Trust of India (UTI), Indiaís largest mutual fund with over 66% market share announced its results today (3rd, July 2000). With total sales of Rs 164.5 bn, it achieved 96% of its sales target. Repurchases and redemptions were lower by 25%.

US-64 Ė UTIís flagship scheme also turned in a stellar performance, with net sales clocking 176% growth at Rs 23.9 bn. Unitholders under this scheme were rewarded with 13.75% (Rs 1.375 per unit) dividend. There was already some anticipation on these lines, which was more than reflected in the Rs 6 bn inflows in US-64 in only the first 15 days of June. However, it remains to be seen how long this money stays with UTI. A dividend announcement in July is normally preceded by a surge in inflows followed by an exodus after the collection of dividends.

US-64ís equity-debt allocation during the year was 68:32 as compared to 72:28 last year. This seems to imply that UTI adopted a slightly more cautious approach towards US-64, with an eye on safety as opposed to aggressive growth.

Large scale restructuring across many of UTIís portfolios seems to have done it a lot of good. The surge in IT stocks boosted its net assets considerably especially since UTI had taken over US$ 1 bn exposure to IT stocks last year. In the press conference organised to reveal UTIís FY2000 results, P.S. Subramanyam, UTI Chairman, revealed that UTI would continue to hold positions in IT stocks, at the same time not ignoring cyclicals.

In addition to US-64, UTIís sectoral funds have also posted impressive performances, particularly its software fund (UTI Ė GSF (Software)), which appreciated 166% year-on-year. UTI Ė GSF (Services) outperformed even the software fund by appreciating 255% over last year. Thatís something more for UTIís investors to cheer about.

View the entire press release here

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