Unit Trust likely to resume sale of CCCGF units with lower returns

Friday, December 19 1997

Unit Trust likely to resume sale of CCCGF units with lower returns

Aabhas Pandya

NEW DELHI, Dec 18: The Unit Trust of India is contemplating withdrawal of suspension on fresh sale of units under its Children's College and Career Growth Fund (CCCGF). The institution, which offers an assured return of 14 per cent for a period of 21 years, was forced to suspend fresh sale of units on account of heavy inflows.

According to sources in the fund, the scheme is being reviewed. "When we started the scheme, we offered an assured return of 12 per cent, which was then increased gradually to 14 per cent. Sale of units may possibly be recommended, probably with a lower assured return," said a senior official of UTI.

Earlier this year, the scheme had attracted more than Rs 130 crore in the first four months, beginning July. The fact that UTI had put up several advertisements to announce the suspension of fresh sales only gave a fillip to inflows. The overwhelming response can be gauged from the fact that CCCGF attracts close to Rs 200 crore on a yearly basis (July to June). The corpus of the scheme currently stands at Rs 2500 crore.

Besides investing in debt instruments, the scheme deploys a small amount in the equity market. "In the event of a drop in interest rates, our exposure to the equity market provides an adequate hedge," he added. There are hardly any premature redemptions since any investor in CCCGF invests for a longer period, ranging between 10-18 years.

Meanwhile, UTI has mopped up close to Rs 230 crore in its monthly income plan, MIP (V) as of December 15. The fund has set an internal target of Rs 500 crore for MIP (V). The scheme, which offers an assured return of 11.75 per cent, closes for subscription on December 31.

Officials at UTI are confident of achieving the Rs 500 crore target. Besides monthly and cumulative options, UTI has offered returns on annual basis in MIP (V). "The response has been encouraging and has come mostly from the retail investors." However, market sources point out that with a less than 12 per cent assured return, big ticket investors may shun the scheme. With interest rates on the decline, the fund had steadily lowered assured returns in its MIP schemes.