Uti Portfolio Churning Led To Rs 1,622 Crore Losses

The Unit Trust of India's (UTI's)loss on account of sale/redemption of investments stood at Rs 1,622 crore as on December 31, 2001.

The half-yearly accounts for the period ended December 31, 2001, show that the country's largest mutual fund has shown a positive return on investments in 12 schemes out of 68 schemes.

These 12 schemes managed to book profits to the tune of Rs 31.93 crore by churning the portfolio during July-December 2001.

However, the profits could not offset the huge losses of Rs 1,653.62 crore booked by the institution's 56 schemes.

The losses posted by these schemes also wiped out the total income and pushed the UTI into negative terrain.

Together, income for 56 schemes was a negative Rs 19.5 crore. The 12 schemes that booked profits added to its earning to end with a aggregate income of Rs 210 crore as on December 31, 2001.

The flagship US-64 scheme had a maximum loss of Rs 726.81 crore accounting for 45 per cent of the total losses of Rs 1,622 crore. The losses could had been aggravated with heavy redemption pressure in the scheme which may have forced distress sales, despite lower returns.

The scheme had sold off few of its top holding like Reliance Industries, Reliance Petroleum, ITC, HDFC, Hindustan Lever, etc. over the period.

Two debt schemes that followed US-64 in posting high quantum of losses through churning of portfolios are monthly income plan 2000 (MIP 2000) with a loss of Rs 94.41 crore and IISFUS 98 with Rs 57.21 crore.

G-Sec, a open-ended gilt fund, earned maximum profits through portfolio churning. The scheme's profit stood at Rs 13.35 crore as on December 31, 2001. The scheme -- one among the performers -- has earned a return of 14.5 per cent since inception.

This was followed by Master Equity Plan 1995 with a profit of Rs 7.74 crore. Booking profit at higher levels at counters like Infosys Technologies, Hindustan Lever, MTNL, Birla Corporation and second rung counters like Agro-Tech Foods, Mukand, SPL, etc. helped the scheme gain.

Mastergrowth earned third largest profit at Rs 6.22 crore as on December 31, 2001.