No break-up of UTI on anvil

S. Vaidya Nathan

THE Government has indicated that it does not favour splitting the Unit Trust of India (UTI) into smaller entities.

This was suggested by the World Bank. The Minister of State for Finance, Mr. Balasaheb Vikhe Patil, mentioned in the Rajya Sabha the following aspects in relation to the issue:

*The rationale for the World Bank's suggestion (and not a demand) was that there was a need to alter the dominant position of the UTI, as it controlled more than 60 per cent of the mutual funds market.

*The dominant position of the UTI contributes substantially to the high concentration of ownership in major stocks.

*The Securities and Exchange Board of India (SEBI) has disagreed with the World Bank suggestion placed before the government for consideration.

*As a counter to the World Bank view, SEBI has said the advantages of `scale and wealth of experience' under one roof would be taken away if the UTI is split.

*SEBI also held out the view that it was necessary to have large investors to provide competition, and that a smaller UTI could not provide competition to foreign institutional investors. SEBI had expressed its views on the matter to UTI.

October MF flows: According to the Association of Mutual Funds of India, funds have collected Rs 1,413 crore in October. This represents a reversal of trends since there was an outflow of Rs 778 crore in September. Interestingly, the UTI reported net outflows of Rs 17 crore as against inflows of Rs 838 crore in September. Redemption was Rs 6,847 crore.

The assets under management as of October end was Rs 96,837 crore, against Rs 97,462 crore as of September 2000. The UTI had assets of Rs 62,706 crore, down some 3 per cent from September's Rs 64,521 crore.

Dundee dividends: Dundee Mutual Fund has declared monthly dividends for three of its open-end schemes. The dividends are: 0.80 per cent for Dundee Sovereign Trust, 0.46 per cent for Dundee Corporate Bond Fund and 0.68 per cent for the Dundee PSU Bond Fund. The record date for the dividend was November 15. Dundee Mutual Fund has assets worth Rs 200 crore under management and is managed by Dundee Investment & Research Pvt Ltd.

Alliance Cash Manager: Alliance Capital Mutual Fund has declared a dividend of Rs 1.50 per unit as dividend for the week ended November 17 for the weekly Dividend Plan. Investors on record under the Dividend Plan option as on November 17 are eligible to receive this dividend. The NAV as on November 17 for Alliance Cash Manager Dividend Plan was Rs 1,001.83 per unit. The investment objective of Alliance Cash Manager is income with superior liquidity through a portfolio invested 100 per cent in high quality Debt and money market securities.

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IDBI load change: IDBI Principal Mutual Fund has announced a revision in the load structure of one of its schemes -- IDBI Principal Deposit Fund. The change is applicable for Plans B and C of the fund. The fund has decided to levy an entry load of 4 per cent on NAV against the present no-load basis. The load structure change takes effect from November 20. The revised load structure will be in force till further notice, and the other features of Plans B and C will remain unchanged.

K-Bond Serial Plans: Kotak Mahindra Mutual Fund has launched serial plans for K-Bond scheme. This comes a year after the launch of the serial plans under its K-Gilt scheme. The fund now proposes to launch Serial Plans under its K-Bond unit scheme 1999. K-Bond is an open-ended debt scheme, which has two plans -- Deposit and Wholesale.

Serial plans are basically open-ended plans with a fixed maturity that invest in securities maturing before the maturity date of the plan. This nearly eliminates the interest rate risk for investors that stay in the plan till maturity. K-Bond serial plans will invest mainly in corporate debt instruments and money market instruments.

The first plan is named K-Bond Serial 2001, and subsequent plans will be designated for each ensuing calendar year (2002, 2003, 2004 and so on). Each Serial Plan will be available in two sub-plans -- Plan A, maturing on April 7, and Plan B, maturing on December 31 of that year. So, K-Bond Serial Plan 2001 sub-plan A will mature on April 7, 2001 and sub-plan B on December 31, 2001. Each sub-plan will have dividend and growth options.

All the units under each sub-plan will be compulsorily redeemed on maturity. Each sub-plan will be open for purchase and redemption of units at NAV-related prices till maturity. There will be no entry load, though there will be an exit load of 0.25 per cent of the applicable NAV on redemption made within three months from the date of purchase of units. However, no exit load will be applicable at the time of maturity of the scheme, irrespective of when the investments are made. The minimum purchase amount under the scheme will be Rs 5,00,000

Tata Fund corpus: The corpus of Tata Mutual Fund increased to Rs 692 crore as of October 31 from Rs 534 crore as on March 31, the jump being largely due to the rise in the corpus of Tata Income Fund, whose base has moved up from Rs 264 crore to Rs 345 crore. The corpus of the equity funds increased from Rs 65 crore to Rs 110 cores, while that of the Tata Young Citizens Fund has gone up to Rs 52 crore from Rs 28 crore.

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US-64 prices: The Unit Trust of India has fixed the sale price and repurchase price for US-64 at Rs 14 per unit and Rs 13.70 per unit respectively for October. These prices represent a 10-paise rise over the October prices.