In a bid to tap the large investible surplus lying with the public, the Unit Trust of India (UTI) is planning to introduce sector and client-specific funds to add to its existing portfolio, UTI chairman M Damodaran said.
Refusing to reveal further details, he proposed to offer more facilities for investors in the ongoing schemes, such as providing income options to funds that do not have them.
On the restructuring exercise after the US-64 crisis, Damodaran said: "Enough churning of portfolio is taking place in US-64 and we have decided to exit from marginal holdings to reduce the number of scrips in the portfolio". At present, he said three scrips occupy 43 per cent of the US-64 portfolio.
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"Apart from reducing the equity portion in the total portfolio, we would like to exit from over-weighed and not so bullish sectors in a gradual manner," he added. He hoped that the changes would shore up the NAV of US-64 scheme before making it NAV-based.
Damodaran said UTI is not facing any redemption pressure on its flagship US-64 fund after it partially eased a ban on withdrawals. "The total redemptions in the past 20 days since we allowed redemptions from August 1 has been Rs 88 crore, all of which has been met from our own funds and there is no pressure on us," he said.
The UTI chief reiterated that he hoped the trust would be in a position to start offering to repurchase US-64 units at the fund's net asset value (NAV) by October, and at the latest before January. "I will be happier with October than November but let us see when October comes," he said when asked how soon UTI may begin declaring a NAV-based repurchase price.
"We will certainly move to the NAV before January." UTI, which managed Rs 57,500 crore in assets spread over 87 funds as of June 30, has never disclosed the net asset value of the US-64 fund.
US-64 unit holders can now redeem up to 3,000 units at Rs 10 apiece. That guaranteed minimum price will rise by Rs 0.10 per month to Rs 12 by May 2003. The fixed price gives investors an assured return.
Damodaran said UTI was taking time in switching to a NAV-linked repurchase price in order to ensure that the NAV improved from its current level. "US-64 has suffered a loss of value, which, I stress, is a temporary loss of value that is largely market-related and we are in the process of taking several measures to ensure that when we declare the NAV it will be better than it was some time back."
He ruled out 'distress sale' of either its bluechip holdings or real estate to meet the liquidity requirements, adding that there were no liquidity problems. In the last 20 days only Rs 82 crore of redemption were affected under the Special Liquidity Package for unit holders of US-64.
To a query as to whether 'inter-scheme transfers' were made to bail-out US-64 or other schemes, he said it was done as per pre-determined procedures at the previous days closing price. However, he refused to provide details of such transfers.
On the reported apprehensions that UTI will not be able to meet its commitments under the Monthly Income Plans (MIPs), he said that despite less corpus in some schemes, the institution would meet its promised commitments.