Uti Plans New Thrust For Flagging Us-95

Unit Scheme 1995 (US-95), once touted as Unit Trust of India's alternative to its flagship scheme US-64, is threatening to fade into oblivion. The trust has therefore decided to accord a major thrust towards the scheme and woo institutional investors, for whom it was launched, aggressively a few months from now.

UTI officials told Business Standard yesterday the US-95 scheme had not been too successful on performance. It had generated returns of only around 12 per cent, generating lack of interest in the fund. But, with the markets picking up, in the coming months UTI would refocus the scheme and try to bring back the large investors into the scheme.

``After all, the performance of any fund is a function of the market conditions. That is true for US-95 as well. The scheme, admittedly, has not performed up to expectations,'' an official said.

Launched in 1995 with a corpus of around Rs 200 crore, US-95 has remained more or less stagnant, with little to show by way of performance.

This, despite the fact that it was set up mainly to lure the corporates and large investors away from US-64 and was launched at a time when US-64 had suspended fresh sales in 1995 to stem the surge of corporate interest into the scheme.

Now, after a poor 1995-96, UTI has reopened the doors of US-64 to corporates, who now have an option going in for either of the schemes. Some megacorps, for instance ITC Ltd, have during 1996-97 opted to go for the latter after liquidating their holdings in US-64.

But, by and large, corporates continue to rush to US-64. In fact, in July 1997, even banks rushed in large numbers to US-64, despite US-95 being a clear alternative designed for them.

``US-64 is a scheme where the presence of institutions and corporates reduce the cost of operations considerably, while at the same time the presence of individuals provide a kind of insurance to corporates who are sure that the returns would be maintained. US-95, on the other hand, is a purely institutional scheme,'' the official said.

This could be one of the reasons why US-95 did not perform as expected, he added.

Even UTI circles agree there has been little by way of marketing thrust for US-95.

UTI's explanation is the performance needs to improve, before marketing can turn aggressive.

The Net Asset Value (NAV) of the scheme as on July 23 was Rs 101.31, up only marginally from Rs 100.85 the week before. The sale price till August 3 was Rs 101.35, while the repurchase price was Rs 99.30.

UTI officials maintain it is unfortunate US-95 is not a major success, despite being a transparent scheme with weekly pricing and NAV declaration. Further, it is a more balanced fund than US-64, with an even debt-equity distribution.

They point out that US-64 and the Monthly Income Plan together would mop up almost Rs 3,000 crore in July-August this year, while no other mutual fund can even dream of such mobilisations. But, amidst all this, US-95 remained stagnant.