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UTI restructuring - pharma, PSU get the boot - Views on News from Equitymaster
 
 
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  • Nov 13, 1999

    UTI restructuring - pharma, PSU get the boot

    After the successful restructuring of US-64, Unit Trust of India (UTI) has extended the restructuring process to other equity schemes. It has dumped FMCG stocks from its portfolio, and has added some infotech (IT) and pharma stocks. This was reported by a leading financial daily.

    UTI, with assets in excess of Rs 630 bn as on 31st August 1999, is India's largest mutual fund (MF). It accounts for 73% of India's MF segment.

    UTI has reduced exposure to fast-moving-consumer-goods (FMCG) stocks, particularly ITC. ITC, which was the leading stock in most of its schemes is now off the top spot. It has been replaced by Hindustan Lever as the numero uno stock in six schemes. UTI has also made significant purchases of Ranbaxy and Infosys.

    US-64's restructuring was very successful, and UTI witnessed higher net inflows (from US-64) in 1QFY2000 . However, its other equity schemes lost favour with investors. US-64 reserves have already increased to Rs 28.8 bn in September 1999, as against Rs 1.3 bn in June 1999. But UTI is facing redemption pressure on its other equity schemes viz. MEP 91-96, Mastergain-92, and Master Plus-91.

    UTI is on the right track by restructuring these schemes. But the effects of the restructuring process are unlikely to bear fruit in the immediate future. Till such a time, it may continue to witness higher net outflows. It is only after these schemes begin posting returns in line with their peers, will UTI see higher net inflows.

     

     

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