Uti Pegs 13% Return For Mip 97 (Iii)

The Unit Trust of India (UTI) has decided to offer a 13 per cent return for Monthly Income Plan 97 (III).

This is one percentage point lower than the ongoing MIP 97 (II) which offers a monthly return of 14 per cent.

This is possibly the lowest return offered by an income scheme in recent years, mutual fund industry sources said.

The UTI decision has come in the wake of prevailing lower interest rates after the recent credit policy announcements. The first scheme of the MIP 97 series has offered a monthly return of 15 per cent.

The MIP 97 (III) is expected to be launched next month.

The sharp drop in returns in the Monthly Income Plan series has come in the space of only four months after MIP 97 (the first scheme of the MIP series of this year) closed its subscription on April 6.

The UTI chairman G P Gupta said the returns for MIP 97 (III) has been scaled down in view of the current returns from the debt instruments.

Business Standard had earlier reported that even while UTI is set to mop up huge collections of over Rs 2,700 crore through its various income schemes, it has found it difficult to ensure promised returns to its investors.

The UTI income schemes are meanwhile collecting record number of subscriptions mainly on account of higher promised returns of around 15 per cent (annualised).

While interest rates on most debt instruments are ruling around 14.5 per cent, while UTI is committed to providing an assured return of around 15 per cent (annualised) to investors in its schemes.

The recent bond issues floated by triple A rated company, Reliance Industries and SAIL could get a return of 14.5 per cent.

However, in order to generate a 15 per cent annualised return, the UTI schemes have to earn an income of around 16 per cent.

The collection figure of Institutional Investor Special Fund Unit Scheme (IISFUS), launched on April 15, is a phenomenal 100 per cent higher over the corresponding figures of the earlier IISFUS'96 on its 28th day of collection.

The scheme has already collected Rs 210 crore and it is estimated that the scheme would be collecting Rs 500 crore through collections from high net worth investors.

This is not the only UTI income scheme which is in its way of collecting huge subscriptions for the collection figure of Monthly Income Plan 97 (II), launched on April 24, is also 50 per cent higher over the corresponding figures of Monthly Income Plan 97.

Both the MIPs are targeted for small investors wanting assured monthly returns for five years. While MIP 97 had collected Rs 770 crore as fresh sales and another Rs 400 crore through roll-overs, MIP 97 (II) has already collected Rs 140 crore and estimated collection figures are to the tune of Rs 1,000 crore.The offer is one point lower than the 14% assured for the ongoing MIP 97 (II). This is possibly the lowest return for an income scheme in recent years.