UTI Mutual Fund aims to mop up R500 crore from its new closed-ended Focussed Equity Fund that will remain open for subscription on August 13-27.
Though the scheme will not guarantee any returns, the 1,100-day equity scheme will invest in shares of companies that have a steady operation cash flow (OCF) and records good profit growth as UTI fund managers see a robust earnings growth following low inflation, softening interest rates and rising profit margins. It will benchmark the S&P BSE 200 index.
“We are targeting R500 crore from the issue,” said Suraj Kaeley, UTI MF group president for sales and marketing.
Asked why UTI AMC is launching a equity scheme at a time when the market seems to be stretched, the funds head of equity Anoop Bhaskar listed out a number of parameters that suggest some stocks can still offer handsome gains in coming years going by a positive operating cash flows and net profits of over R50 crore.
With moderation in inflation and interest rates, UTI MF expects the Ebitda margins to improve significantly in the coming years as the present margin at a little over 16% was lower than the long-term average of 18%, Bhaskar said. Even the price-earning ratio (P/E) was near the long term average, he added.
The scheme does not have an entry load and even UTI will not charge an exit load for redemptions made on maturity date. The Focussed Equity Series I scheme will offer a regular and a direct plan both of which offer a growth option and a dividend option.