Uti To Prune Equity In Ulip To 30%

The Unit Trust of India (UTI) plans to restructure its over Rs 4,700 crore tax-saving scheme, Unit Link Insurance Plan (ULIP), in the near future.

UTI is looking at bringing down the level of equity component in the scheme's portfolio to a maximum of 30 per cent by June 2003 or such extended period as decided by the trust.

The institution is also contemplating to increase the debt component of the scheme to 70 per cent.

Anita Madan, assistant general manager, UTI, said, "The restructuring is already on to bring down the number of scrips in the portfolio but is slow due to the narrow market range."

Apart from ULIP, Madan also manages Senior Citizen Unit Plan and Bhopla Gas Victim Monthly Income Plan taking the total corpus under management to Rs 5,170 crore.

ULIP has a corpus of Rs 4,769.45 crore as on September 2001. It currently has 40 per cent of its portfolio in equities, around 57 per cent in debt instruments (including corporate papers with below A rating) and balance in government securities and money market instruments.

One of the major constrain for the scheme is the large numbers of companies it has invested into and the fund manager is set to get rid of around 180 companies and around 380 debt papers.

"We plan to enter into strategic sales with companies in order to get ride of these stocks and papers," Madan said.

The scheme has non-performing assets to the tune of Rs 776 crore, which is 20 percent of the portfolio. "We may seen an additional provision of one per cent in the current year," Madan added.

Interestingly, ULIP, which has an investor base of 13.8 lakh investors, has maintained an average return of around 13 per cent in the last 7 years.

UTI last year had converted ULIP into an open-ended scheme with purchases/sales based on the net asset value in line with the Securities Exchange Board of India guidelines.

"We look at opportunities at booking profit and when we see value we maintain 7-10 per cent of the portfolio for trading," she said.

Madan added "Having worked for more than 15 years, I have seen it all, but things have now changed for the better."