Anoop Bhaskar, Head-Equity at UTI AMC, said, "The opportunity to launch a new product is fairly limited. We are looking at ways to make our existing products more relevant." The oldest mutual fund house in the country, UTI is merging its nine-year old scheme UTI Software with its Services Industries fund.
The software fund has given returns of -37.21 per cent and the services fund has returned -22.65 per cent in a year, according to data from Valueresearch Online. The BSE IT index has declined by 30 per cent since January last year.
The software fund, launched in June 1999, had assets under management (AUM) of Rs 76 crore as on June 30, 2008. Services fund, launched in the same year, has AUMs of Rs 265 crore.
"Sector funds require investors who understand the cycles and dynamics. Such investors are rare. These are not buy and hold kind of funds. Fund managers need to book profits when the sector's valuation is around its peak," said Bhaskar.
The AMC has also broadened the investment mandate of its fund by focusing exclusively on the auto sector and including logistics as an additional sector. The scheme is now called Transportation and Logistics Fund.
The size of the newly merged fund is only Rs 31.27 crore as the auto sector has underperformed the broader indices. The BSE Auto index has fallen by 34 per cent since January last year.
"An auto fund will perform badly most of the time. But a theme-based fund such as the one we have now will dip lesser. The narrower the fund's theme, the greater the chances that it will underperform the broad market," Bhaskar said.
The AMC is also planning to convert its UTI-MNC scheme into an India International fund. The new fund will invest in stocks of companies that derive at least 20 per cent of their revenues from overseas. The AUM of the the UTI MNC scheme on Wednesday stands at Rs 146 crore.
"MNCs have lost their relevance on Wednesday. The MNC scheme had great investor interest when it was launched. At that time, MNCs delivered better goods and services compared to the domestic companies. They were also more transparent. There is currently no difference between the two," Bhaskar said.
The fund house has recently introduced a systematic investment plan (SIP) for its ULIP
