Uti Set To Launch Equity Growth Scheme In May

The Unit Trust of India (UTI) is set to launch its first pure growth scheme for this calendar year sometime in May.

UTI officials said yesterday a draft prospectus for the scheme has been filed with the Securities and Exchange Board of India (Sebi) and the scheme is expected to open for subscription in May. Barring tax-savings schemes of the Monthly Equity Plan (MIP) family, UTI did not launch any equity scheme in the first four months of this year.

The last time, when UTI launched an equity-oriented scheme, it managed to collect only Rs 26 crore. The subscription was collected at a time when the stockmarkets along with the sentiment were down, said UTIs chief general manager B G Daga.

 

The proposed scheme will be investing 90-95 per cent in equity instruments, while the balance will be invested in debt instruments.

This, however, does not mean that UTI will be shifting focus from income schemes which has collected record amounts in recent months.

UTI will continue to be in debt as well as in equity as this satisfies the needs of two distinct classes of investors. While those subscribing to income schemes are typically risk-averse, investors to growth schemes are more market savvy, said a top source at UTI.

UTIs Institutional Investors Scheme, also offering a 14 per cent return to institutions, has so far collected Rs 100 crore. This scheme is expected to collect over Rs 500 crore, sources said.

A senior UTI official, however, expressed concern over the scheme collecting excess funds in the backdrop of falling interest rates saying this will, eventually, lead to problems as regards income distribution. The UTI chairman, G P Gupta, refuted this saying the trust is comfortably placed and will not face any problems in honouring its commitments.

UTI has two debt-oriented schemes, which are now open for subscription.

After the phenomenal success of MIP 97 which collected nearly Rs 1,200 crore, UTI has launched MIP 97 (II). The scheme, offering a 14 per cent return, is targeted exclusively at retail investors.

Daga, while commenting on media reports that UTI is selling heavily in index scrips, said there has been negligible selling by the trust in the last couple of days and on many days UTI has been a net buyer.

The trust had been a net seller during 1996.