| |
Unit Trust may unveil maiden open-ended debt fund
AF Rosemary
MUMBAI, January 2: The Unit Trust of India (UTI) is contemplating the launch of its first open-ended debt fund. According to sources, the institution is considering such a scheme because the lack of an open-ended debt fund is the only gap in its family of funds.All the existing debt schemes of UTI are close-ended ones. The only other "income" scheme of UTI which is open-ended is the popular US-64. But since US-64 has a strong equity portfolio as well, it is considered more of a balanced fund. So far, the Trust has been mopping up monies for its debt schemes through the monthly income plans which are fixed-tenure closed funds. It had earlier been felt that an open-ended debt fund might threaten collections made by UTI's flagship scheme, US-64. However, it is now being felt that a pure open-ended debt fund will be another product in itself.Besides, UTI is beginning to face a challenge from the private sector open-ended income funds with Birla Income Plus finding it difficult to reign in monies that never
seem to stop coming. The corpus of Birla Income has already swollen to over Rs 500 crore in barely one year. While US-64 has been doing very well in the current financial year, with the July special offering raking in a good Rs 3,000 crore apart from collections of nearly Rs 100 crore recorded every month thereafter, the five monthly income plans (MIPs) have also done rather well, having cumulatively collected Rs 5,000 crore in 1997 alone. The attraction of the MIPs is their monthly assured return while US-64 has been able to pay out a good dividend every year, having accumulated a very strong portfolio since 1964. However, for the scheme that is being planned, sources said that UTI would like to get out of the ritual of offering regular dividends and rather have the investor enjoy the benefits of capital growth. UTI hopes to rake in monies from investors who may find the scheme attractive particularly from the tax angle, sources said. The scheme will be particularly attractive for investors who have
exhausted alternatives under section 80L of the Income Tax Act, they added. While the scheme will be open regularly for sales and repurchases, UTI will also explore giving investors with a lock-in option so as to avail of long-term capital gains tax benefits. Sources said that UTI is open to the idea of not gathering too much money in the first year.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
|
 |
