While this indicates losses in investor capital, a sizeable number of these are assured return schemes which run massive shortfalls. All these MIPs also have a capital guarantee which means that the plans will have to be redeemed at least on par value.
The spurt in the negative reserves is mainly due to an erosion in the value of investments as well as loss on sale/redemption of investments. During the half-year period ended June 30, 2002, the MIPs showed a combined loss of Rs 564.82 crore on account of sale and redemption of investments. However, such losses were only Rs 77.28 crore during the corresponding period last year.
As on June 30, 2001, the combined negative reserves of the 14 schemes were Rs 1,803.23 crore. The combined unit capital of the 14 schemes has risen from around Rs 15,403 crore as on June 30, 2001 to Rs 15,875 crore as on June 30, 2002.
MIP ’99, UTI’s biggest monthly income plan with a current unit capital of Rs 2,833.33 crore, has shown a negative reserve to the tune of Rs 419.4 crore. Nevertheless, the biggest contributor to the combined negative reserve is MIP 2000. With an unit capital of Rs 1,489.82 crore as on June 30, 2002, MIP 2000 has a negative reserve of Rs 473.32 crore.
MIP 2000, which had a negative reserve of Rs 336.26 crore as on June 30, 2001, suffered the biggest loss of Rs 178.69 crore among the MIPs on account of sale/redemption of investments during the half-year ended June 30, 2002. Such loss was Rs 21.09 crore during the corresponding period last year, showing a sharp spurt.
MIP ’98 II, with a current unit capital of Rs 963.93 crore, also runs high negative reserve to the tune of Rs 441 crore and its loss on sale/redemption of investments stood at Rs 57.19 crore. As on June 30, 2001, the scheme had a negative reserve of Rs 176.54 crore.
Other major contributors to the combined negative reserve of monthly income plans include MIP 98 III (Rs 416.21 crore), MIP ’98 (Rs 296.78 crore), MIP ’97 III (Rs 260.12 crore), MIP 97 IV (Rs 255.66 crore), MIP V (Rs 170 crore), MIP ’98 IV (Rs 184.12 crore), MIP ’98 V (Rs 260.42 crore) and MIP ’99 II (Rs 265 crore).
The portfolios of these MIPs have on an average up to 80 per cent of the investments in debt and up to 20 per cent in equities. Considering the assured-return nature of most of these schemes, the equity exposure, according to analysts, has been slightly on the higher side.