UTI Mutual Fund eyes Rs 500 cr

UTI Mutual Fund is targetting to mop up Rs 500 crore with the launch of its new close ended equity scheme.

The new fund 'UTI Focussed Equity Fund - Series 1' would be open for subscription on August 13 and close on August 27, 2014.

The scheme would invest in up to 30 securities, company's country head (retail) and executive VP said Debashish Mohanty here.

UTI currently has about Rs 80,000 asset under management (AUM) and is one of the oldest companies in business.

"We have come with a new fund offer (NFO) after six years," he informed.

He said the company was launching NFO after more than two months of the formation of the new government, since the market had witnessed a bull run in its immediate aftermath.

Past experiences showed such bull runs were also spurred by sentiments and euphoria, as such could lead to unrealistic valuations of stocks, he noted.

Meanwhile, the company is hopeful of good mop-up in smaller towns. "We are the leader in smaller cities and almost 35% of our inflows come from such towns due to our reach," Mohanty added.

He said liquid funds were preferred by corporate and banks, whose lock in period could be as low as 10 days. These funds require constant churning to maximise profits and are chosen by treasury operation managers.

"However, retail investors prefer equity schemes to provide for future expenses, such as education," he said.

The consolidated AUM of domestic industry is estimated at Rs 10 lakh crore, of which 90% comes from top 15 cities alone.