Nov 3, 1999|
US-64 reserves in recovery mode
According to newspaper reports, US-64 reserves have shot up to Rs 25 bn as on September 30, 1999.
UTI, with assets in excess of Rs 601 bn as on 31st August 1999, is India's largest mutual fund (MF). It commenced operations in 1964, with the launch of Unit Scheme 1964 (US-64), its flagship scheme. Currently, UTI accounts for more than 75% of India's MF segment.
US-64 reserves have appreciated from Rs 1.3 bn in June 30, 1999 to Rs 25 bn by September 30, 1999. The scheme seems to have benefited largely from the recent surge in stock prices and is believed to have booked profits, when the markets peaked in the second week of October. It also took this opportunity to offload the duds in its portfolio.
US-64 has employed some of the recommendations of the Deepak Parekh committee. The scheme not only restructured its equity portfolio, but also announced dividends in line with the yields on the fixed income securities in its portfolio. Therefore, it announced dividends at Rs 1.3 per unit, as compared to Rs 2 last year. However, some recommendations have still to be implemented, chief of among which is the linking of sale/repurchase price to the net asset value (NAV).
Nevertheless, the rise in US-64 reserves will come as good news for its investors. After sustained erosion of its reserves, this is just what the doctor ordered for US-64. Investor confidence will get a boost and the scheme could witness higher inflows on the back of this positive development.
After news of the Rs 11 bn that UTI garnered under its monthly income plan (MIP), rise in the US-64 reserves seems to indicate that it is finally getting its act together. In that case, the private MF won't find the going that easy, where UTI is concerned.
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