A liquid fund

FUND PICK: UTI Liquid Cash Regular

UTI Liquid Cash Regular tries to improve the margin by which it beats the category.

Launched in June 2003, UTI Liquid Cash Regular has seen its assets grow to become the second biggest fund in the category of liquid funds, on the back of a good performance record.

The fund does not charge any entry or exit load. However, the minimum investment amount of Rs 1 lakh is one of the highest in the category.

Since launch, the fund has posted remarkably good performance and always tried to improve on the margin by which it beats the category average. The fund gave a return of 4.56 per cent when the category average was 4.43 per cent.

At present the fund manages Rs 2,572 crore which is the second highest after the sudden spurt in March 2004 when the assets nearly doubled to Rs 3,203 crore.

As far as its holdings are concerned, the fund has steadily increased exposure to AAA-rated corporate debt instruments. Cash and bank deposits constitute 24.86 per cent of net assets. It maintains quite a reasonable expense ratio. In March, 2005, its expenses were to the tune of 0.40 per cent.

The fund has maintained the average maturity of its debt instruments at low levels, thereby making the portfolio less risky. In the past one year the average maturity has never exceeded 100 days.

The fund aims to offer reasonable return to investors looking to park short-term surpluses. It attaches importance to low-credit risk, portfolio diversification and stability of returns. 
 

Top holdings
As on March 31, 2005	Value  (Cr)	Net  Assets  (%)
ICICI Bank (CD)	230.85	8.54
Kotak Mahindra Bank	172.95	6.40
HDFC	150.12	5.55
UCO Bank (CD)	136.52	5.05
ICICI Bank (PTC)18/01/2007	121.41	4.49
ING Vysya Bank	111.63	4.13
Citifinancial Con's Fin 08/08/2006	80.00	2.96
J&K Bank	75.34	2.79
Rabo India Finance	72.42	2.68
HDFC Bank 18/02/2008	54.32	2.01
UCO Bank (STD)	50.00	1.85
UTI Bank	50.00	1.85
State Bank of Hyderabad	50.00	1.85
Canara Bank	50.00	1.85
Yes Bank	47.86	1.77
IDBI 29/09/2007 6.1463%	40.00	1.48
Federal Bank	37.71	1.39
Hudco 29/03/2006 6.18%	35.00	1.29
GE Capital Services 23/07/2006	35.00	1.29
HDFC Bank 15/06/2005	34.80	1.29

For the fund, asset quality and liquidity of instruments are two important parameters. It avoids concentration in a single asset/company to manage risk better. While it alter average maturity, it believes in having a diversified portfolio.

-Value Research

Returns in % as on June 23, 2005

Tax planning funds made a surge to the top among equity funds, displacing FMCG sector funds. The category average for the tax planning category stands at 77.36 per cent for the past 12-month period. 
 

Average category returns
(%)	1 week	1 year
Tax Planning	3.14	77.36
FMCG	3.66	72.55
Diversified	2.8	65.43
Banking	4.28	59.98
Auto	1.25	59.06
Technology	6.25	58.17
Index	8.67	52.63
Pharma	5.35	45.69
Petroleum	0.00	37.61

They were followed by FMCG funds at 72.55 per cent and diversified funds at 65.43 per cent. Petroleum and pharma funds came in last, averaging 37.61 per cent and 45.69 per cent respectively. 
 

Leaders  Tax planning funds
	1 month	1 year
SBI Magnum Tax Gain	4.48	167.8
Taurus Libra Taxshield	8.48	127.33
Prudential ICICI Taxplan	2.88	127.21
HDFC Taxsaver Fund	3.62	118.7
Sundaram Taxsaver	0.43	96.05
HDFC Long Term  Adv. Fund	1.82	84.85
ING Vysya Tax Saving Fund	5.55	77.42
Tata Tax Saving Fund	2-Jan	69.67
Birla Equity Plan	-0.18	67.26

Among tax-saving funds, SBI Magnum Tax Gain was the top performer with returns of 167.80 per cent. LIC Tax Plan came last in the category at 35.28 per cent. 

Laggards Tax planning funds
	1 month	1 year
LIC Tax Plan	3.55	35.28
Alliance Capital Tax Relief 96	3.23	42.24
Escorts Tax Plan	-1.54	50.26
Franklin India Index Tax Fund	8.57	51.82
Canequity Taxsaver	-1.37	57.13
UTI Equity Tax Savings Plan	1.75	59.06
Sahara Taxgain	4.05	59.14
Franklin India Taxshield	3.45	60.22
Principal Personal Taxsaver	2.21	63.87

Among the 19 funds in the category, only four failed to beat the Sensex returns which stood at 53.31 per cent for the past year.