Dec 27, 1999|
US-64 NAV in comeback mode
Unit Trust of India's (UTI) US-64 has made a commendable comeback as its net asset value (NAV) has climbed to equal the repurchase price.
UTI, with assets in excess of Rs 630 bn as on 30th September 1999, is India's largest mutual fund (MF). It accounts for 73% of India's MF segment. The US-64, its bread and butter scheme, accounts for more than 30% of UTI's total net assets. Given US-64's large asset base, buying and selling by the fund has considerable impact on the stock markets.
As reported by a leading financial daily, UTI chairman, P S Subramanyam revealed the reason behind US-64's exceptional performance. He remarked, 'A good pick of pharma stocks, enhancement of value in our core holding in Reliance Petroleum and an 18% exposure to the infotech sector has resulted in US-64 achieving this landmark.'
With this positive development, we could see US-64 moving closer to pricing system governed by the NAV, and not its repurchase price, which is always at a premium to the NAV. Last year, investors got the jitters when they learnt of US-64's financial problems, which included a dramatic erosion of reserves, which only served to erode investor confidence in the scheme. The scheme witnessed large-scale outflows, as investors exited the scheme in favour of more rewarding (and transparent) private funds.
To stem the tide, UTI changed tacks fast and invested heavily in non-traditional sectors like infotech. In all, UTI's equity schemes have hiked exposure to infotech to Rs 40 bn (approx. US$ 1 bn). US-64, alone has IT holdings worth Rs 25.7 bn. Infotech accounts for 18% of US-64's equity portfolio, and 12% of all schemes in UTI's portfolio. As a business daily had reported earlier, UTI chairman, P S Subramanyam, remarked, 'We might have entered (in infotech) a bit late, but we have entered big.'
Another reason why US-64 investors will be smiling is due to significant holdings in several blue-chip companies. Given the takeover frenzy that has currently gripped corporate India, some of these companies will assume even more significance, resulting in a sharp appreciation in share prices, and with it the US-64 NAV.
More Views on News
Mar 10, 2016
An opportunity to find an impeccably trustworthy and competent financial guardian is in the offing.
Feb 29, 2016
Most financial planners come out as whiz kids who throw around financial jargon. But financial planning can be actually easy, provided one follows a disciplined approach.
Feb 12, 2016
PersonalFN highlights the benefits of parking a portion of your expenses in e-wallets and using them efficiently.
Feb 2, 2016
Mutual funds take a bearish call on the FMCG sector. The sector has started playing out due to a combination of slower growth and expensive valuations.
Feb 1, 2016
Ethical practices help build long lasting relationships, and healthy long-term business relationships are often mutually rewarding. But PersonalFN is of the view that the financial services industry in India seems to have forgotten this.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407