The Unit Trust of India (UTI), along with the Bombay Stock Exchange, today launched a co-branded product, Sunder (Sensex UTI Notional Depository Receipts) Scheme. This open-ended passive scheme will invest in stocks comprising the BSE Sensex as its underlying asset. The units of the scheme will be called Sunder shares.
The minimum size for creation/ redemption will be 250,000 units and multiples thereof. Sunder shares would be listed on the BSE and other stock exchanges. These units will have a face value of Rs 10 and will be issued at a premium equivalent to the difference between the closing value of the Sensex on the date of acceptance and the face value. The value of each unit would be equal to approximately 1/100th of the closing value of the Sensex.
The initial offer shall be open for a week for the creation/ allotment of Sunder shares. The scheme would then re-open for sale/ repurchase on a weekly basis and a latter date switch on a daily basis or such intervals as may by announced by UTI. The net distributable income earned by the scheme would either distributed in the form of dividend or reinvested.
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Brij Mohan Daga, senior executive director, UTI, said: "The introduction of this product could generate arbitrage opportunities between the cash and the future market as this product represents futures market in the cash form."
Meanwhile, Anand Rathi, president, Bombay Stock Exchange, said: "This product will provide an opportunity to retail investors to participate in Sensex stocks and at the same cut volatility as delivery based trading will rise with this product."