During the year ended June 30, 1999 only a third of the portfolio is invested in debt instruments with the balance in equities. ``In a regime of falling interest rates, it is difficult to find AAA-rated instruments giving high yields in the secondary market,'' he pointed out.

The tilt to equity is in line with the turnaround in the sentiment in the stock market. ``The market appears to have already discountedthe Kargil factor and the value realisation for a number of PSU stocks are much better,'' said the chairman.

In fact, the downsizing of the SUS package from Rs 4,800 crore to Rs 3,300 crore has been done on the basis of the recovery in the prices of a number of PSU stocks, he explained. This would give the fund the opportunity to book profit and also churn the portfolio in favour of relatively better investments.

``There is always a business risk involved. For the fund manager it's a trade-off between safety and liquidity and risk and return,'' he emphasised. Subramanyiam argued that there would not be any major redemptions in the scheme as the tax-free return is the best available. The scheme witnessed a net outflow of Rs 3000 crore last year. The returns to investors have to be realistic and in line with the earning capacity of the underlying assets, he added.

UTI officials hinted at a gradual change in the pricing policy of the units. This is likely to be in line with the expectations in themarket.

He also indicated that enough signals have been sent to investors on the returns possible in assured return schemes in the recent MIP which raised Rs 2700 crore.