Uti Dangles 14% Assured Return For 5 Years On Mip 97

Unit Trust of India (UTI) has decided to offer a guaranteed return of 14 per cent for five years for its monthly income plan MIP 97 slated to hit the market on February 20.

MIP 97 will be the first scheme with guaranteed returns for a five-year period after the Securities and Exchange Board of India (Sebi) lifted the earlier ban and allowed mutual funds to guarantee returns for five years, provided the fund had a sponsor that would function as a guarantor to the investors. UTI has earmarked the Rs 300-crore Development Reserve Fund (DRF) as guarantor for the scheme.

 

The trusts wholly-owned subsidiary, UTI Investor Services (UTISL), will be the registrar to MIP 97 that will have a lock-in period of three years. The scheme will be listed on the stock exchanges after six months, sources said.

The close-ended monthly income plan, which will remain open to investors till April 6, has a zero capital erosion irrespective of the NAV movements, a UTI official said.

However, with the capital markets showing signs of recovery, the scheme is expected to have substantial capital appreciation on maturity, he added.

The scheme may surpass the target of Rs 500-600 crore, as the five-year guaranteed return is expected to have a positive impact on prospective unitholders, most of whom are retired persons who need an assured return at the end of the month, sources said.

UTI has also offered a conversion option to existing unitholders of its two other schemes, Growing Monthly Income Scheme 92 and Monthly Income Scheme with Growth 90, that mature this year. The two schemes have a total corpus of Rs 970 crore with an investor base of 3.2 lakh unitholders.

UTI is also upbeat on the investor response to its equity-oriented scheme, Master Equity Plan 97.

The scheme offers unitholders the option of availing tax-benefits under Section 88 of the Income Tax Act or capital gains tax exemption under Sections 54EA and 54EB of the IT Act.