“We will bring down equity component slightly to 55 per cent from the current 59 per cent in US-64 by this fiscal end,” Unit Trust of India chairman M Damodaran said. UTI had gradually reduced equity-debt exposure in US-64 to 59:41 now from 60:40 a few months ago. The move comes in the wake of the decline in the net asset value of US-64, having a corpus of about Rs 25,000 crore, after last year’s stock market crash.
UTI, managing assets worth about Rs 50,000 crore, adopted a gradual approach for reducing its equity holding as a major offloading by the fund would affect the Sensex and Nifty to a great extent. As part of efforts to shore up investors’ sentiments, Damodaran said the fund was also planning to introduce trigger option in US-64 that would enable investors to invest or exit the scheme at a pre-determined price level.
“We have introduced trigger option in 14 schemes including open-ended equity and bond schemes. We will introduce this option in US-64 also,” the UTI chief said. UTI has filed application with the Securities and Exchange Board of India for launching four schemes including an index-linked scheme, he said. As part of efforts to improve UTI’s financial positionand ensure higher returns to unit-holders, Mr Damodaran said “we are trying to see that the funds are better managed. We are taking the non-performing assets (NPAs) of each fund and striving to recover them. We have already provided for 90 per cent of the assets which had been written down at minuscule values. So, whatever we recover now is UTI’s gain.”
The fund recently set up a separate asset reconstruction fund to segregate NPAs from the individual schemes and recover them. This ensures higher NAV to the schemes, while allowing the country’s biggest mutual fund to focus on recovery.
Mr Damodaran said the fund has also stressed on greater use of technology in managing the funds. The trigger option introduced in 14 schemes is the net result of using technology to facilitate fund management and ensure higher value to investors.
The revamp exercise in UTI is being pursued on a war-footing after the government decided to bail out the fund, on the condition that it improves its performance and become Sebi compliant by this year. Government also plans to repeal UTI Act by December this year.
Mr Damodaran parried questions on whether the sponsors for UTI has been finalised. He also dodged queries on bifurcation of UTI, as suggested by the Malegam Committee and by theJPC probing the scam.