New Delhi, March 8: Thanks to the historic pricing of NAV, speculators have poured in around Rs 30 crore in Unit Trust of India's UGS 10000 in a span of less than a week. For the week ended March 6, the sale of UGS 10000 units was based on the NAV of February 24 of Rs 13.96. Since then, however, the NAV has shot up by 10.7 per cent to Rs 15.45 thanks to the post-Budget rally. Speculators exploited this anomaly in the pricing of units, which actually facilitated their entry in UGS 10000 at a 10.7 per cent discount to the current NAV.An interval fund, UGS 10000 opens for sale and repurchase of units in the first week of every month. For the month of March, the sale of units was linked to the February 24 NAV of Rs 13.96. Given the entry load of 3 per cent, the units were priced at Rs 14.37. Investors who bought at this price hope to strike it rich when the fund opens for repurchase (and sale) of units next month. Most observers feel given the portfolio of the scheme, a downside to investments in the fund islimited. The investments of UGS 10000 are concentrated in the two fancied sectors of pharma and FMCG.
With the Sensex gaining nearly 330 points last week, the fund's assets under management have gone up from Rs 96.97 crore (as on February 24) to over Rs 107.5 crore (as on March 5). This, however, is based on the assumption that there has been no change in the portfolio of the fund. UGS 10000 has a current unit capital of Rs 69.46 crore.
``The gains of existing investors stand diluted to the extent of fresh investments in the fund which have come at the pre-budget NAV of Rs 13.96,'' said an analyst. ``It is rather alarming that UTI cannot, or does not, intend to calculate NAV of a small fund like UGS 10000 on a daily basis. As a result, existing investors are bound to suffer,'' said a fund manager.
However, these short-term investments are not entirely risk-free. Gains from the fund are linked to the timing of the allotment of units and the market condition towards the end of this month. ``Repurchaseof units will depend on the NAV in the last week of March while allotment is unlikely to take more than a month,'' said a market participant.
Around 75 per cent of the fund's portfolio is invested in the two high-growth sectors of FMCG and pharma. The scrips of these two sectors, besides IT, have been in the forefront of the current rally. Since inception last year, the fund has given a return of 39.6 per cent (based on the NAV of Rs 13.96). The top ten holdings of the fund are HLL, ITC, Nestle, Glaxo, Smithkline Beecham Consumer, Pfizer, NIIT, Indian Shaving Products, Hoechst Marion and Procter & Gamble.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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