MUMBAI, May 22: The Unit Trust of India hopes to mobilise Rs 200 crore from UGS 10000, which is currently open for subscription. The scheme offered only to unitholders of UGS 2000 and UGS 5000 closes on May 29.UGS 10000 will predominantly invest funds in MNC stocks, to ensure high growth in the net asset value (NAV). UTI plans to provide liquidity to investors through repurchase, which will open after six months from the closure of the scheme. Though the scheme is limited to unitholders of UGS 2000 and 5000, UTI may throw it open to other investors eventually.
UTI officials expect good response from investors as they feel the returns from UGS 10000 could be attractive given the track record of MNC stocks. If all the unitholders of UGS 2000 and 5000 opt for this scheme, UTI hopes to raise over Rs 1300 crore.
Apart from returns, UTI sees the advantage of liquidity in the MNC scrips. As much as 70 per cent of the amount raised will be invested in MNC stocks. Perceived as professionally managed companies,MNCs have good support from their parents. UTI will most likely be choosing scrips from MNCs in sectors like pharma and consumer goods.
An internal study by UTI shows that most MNCs have been market outperformers, beating the market by a huge margin. While the Sensex itself has gained five per cent over a year (from March 25, 1997 to March 25, 1998), select MNCs have shown a phenomenal appreciation over this period. Bata India tops the table with an appreciation of 177 per cent. Britannia (94 per cent), Castrol (57 per cent), Glaxo (57 per cent), Hindustan Lever (59 per cent), Nestle (107 per cent), Pfizer (129 per cent) and Reckitt & Colman (67 per cent).
Crisil has created an MNC index with 50 of the listed MNCs. During the period January 1, 1995 to August 31, 1997, while the Crisil 500 composite index fell by 23.94 per cent, the Crisil MNC index rose by 21.94 per cent. This period was one of the worst for the country's equity markets. The MNCs again managed to buck the trend. UGS 10000 proposes topredominantly invest in such scrips. These MNC stocks attract a PE of 50-80, which indicates the confidence of the market in these stocks.
Investors in UGS 10000 would thus be investing in a fund that will not only weather the storm but also provide returns even in a recession.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
