UTI MF plans payout blitzkrieg

UTI board has passed a decision to declare dividend on all its equity and balanced schemes.

UTI Mutual Fund is planning aggressive dividend payouts as a strategy to maintain performance in a booming market. According to a source, the UTI board has passed a decision to declare dividend on all its equity as well as balanced schemes. The announcements relating to individual schemes are to be made soon.

Debasish Mohanty, spokesperson of the fund, confirming the reports said, "The market is rising. We are planning to book profit and share it with our investors," he said.

"Many a times in the past when the markets surged and fell, loyal investors failed to get a share of the profits. Moreover, we feel that better distribution of profit is the only way to be frequently in touch with retail investors," added Mohanty.

The fund house distributed dividends and bonus worth Rs 3,000 crore since January 2003. The highest dividend was paid for the UTI Master Value Fund (100 per cent), which was declared in February this year.

UTI Mutual had announced dividends for five of its equity schemes this year. The fund house had announced 30 per cent dividend each for both its MNC Fund and Masterplus Unit Scheme 91 in the previous year.

DSR Murthy, executive director, UTI Mutual, said in a recent company bulletin, "sharing the prosperity of capital market is our way of life. Our brand is known for the joy it shares."

Almost all the UTI funds have given good returns during the past year. The Thematic Basic Industries fund declared a return at above 80 per cent, followed by the Thematic Mid-cap fund with returns at 64.57 per cent.

While the former paid a dividend of 12.64 per cent in March, the latter announced 10 per cent payout in October 2004. Other schemes declaring good returns include MNC fund (58.37 per cent), Equity Tax Savings Plan (57.92 per cent), Equity fund (56.38 per cent) and UTI-MEPUS (54.43 per cent).

Recently, Reliance Mutual Fund announced its decision to shut its sales window (when the corpus touches Rs 1,700 crore or by mid-August whichever is earlier) in the wake of rising corpus.

The fund house said that this was done to protect the interest of its existing investors in Reliance Growth Fund which primarily invested in mid-cap stocks.

However, UTI Mutual and some other fund houses such as Franklin Templeton and DSPML have adopted an aggressive pay-out strategy to keep the rising corpus in check. This is also a good way to book profits, fund managers said.

UTI Mastershare, which announced 20 per cent returns in September 2004, has Rs 1,410.47 crore asset under management. UTI Equity fund having assets worth Rs 1,199.91 crore has declared 20 per cent dividend in June and UTI-MEPUS fund paid 10 per cent dividend in November 2004 and has Rs 924.50 crore asset under management.