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UTI – For those who missed the Titanic

Jul 20, 2001

The monthly data disclosed by AMFI (Association of Mutual funds in India) for June 2001 underlines the poor performance of the so-called Big Daddy (and now the sinking Titanic) of the domestic mutual fund industry. And again its US-64 that is to blame. UTI’s net assets have borne the brunt of huge outflows from US-64, its flagship product. UTI’s market share has fallen to 57% from 60% in May 2001.

UTI’s assets under management fell to Rs. 559 bn in June 2001 from Rs.577 bn in the month of May 2001. The fund saw heavy redemptions of Rs.23 bn, whereas its sales stood at Rs 19 bn, showing a net redemption of Rs 4 bn. Out of the total redemptions of Rs 23 bn, Rs 20 bn were made in US 64. If one were to remove the weekends in June, it means that there was a Rs 1 bn outflow from US-64 everyday.

US-64 is rightly called the flagship product from UTI. A flagship product is the standard-bearer of the mother brand and is its most popular offering. US-64 may have fulfilled this definition all along, but right now it is anything but popular and UTI needs a new standard-bearer fast. Otherwise it may find itself without any standard, and investors won’t take long to realise that before they jump off the sinking Titanic. In that case, this Titanic will have survivors.

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