Normally, the fund will have not less than 80 per cent exposure in equities. The fund seeks to achieve its objective primarily through investment in shares drawn from the B group on the Bombay Stock Exchange. Not less than 80 per cent of the equity investment will be in B group or similar scrips.

Investment criteria will include low price earning ratio, high dividend yield, low price to book value ratio and emerging growth companies.

Liquidity in the fund is being offered through listing at the Bombay Stock Exchange and National Stock Exchange six months from the issue close date. The fund will not offer repurchase facility during its tenure. The minimum investment is Rs 5000 and in multiples of Rs 1,000. The minimum targeted amount is Rs 50 crore. The initial public offering closeson June 30.

Master Value is a classical closed-end fund. It is being launched at a time when open end funds with instant liquidity at NAV based price have become the order of the day. Even UTI has been converting its closed-end fund into open-end. A closed-end fund, Master Value does not offer repurchase during it tenure.

The closed-end structure of the fund is in line with its investment philosophy. Master Value seeks to identify value stocks among the mid cap and small cap segments. It is being launched at a time when most of the other funds have been concentrating on growth stocks.

Even funds which follow the value approach have been concentrating only on the large cap segment. The mid cap and small cap stocks are currently out of favour and might take time to gain market fancy. Master Value could take a couple of years before its starts performing.

On the positive side, the five year closed-end structure should enable the fund to take a long term view with out worrying about the investors movingin and out of the fund. Moreover, unlike an open end fund where a substantial amount has to be kept in liquid assets to meet unforeseen redemption, almost the entire corpus of the fund would be working in equities investment.

With over Rs 30,000 crore in equities, UTI has been a fairly successful fund manager though its performance has taken a beating post-1994. Unlike other funds from UTI, which have a large cap orientation, Master Value will be the first mid-small cap specific fund from UTI.

With most closed-end equity fund trading at a discount to the NAV, it might be a good idea to buy the fund from the secondary market once it gets listed. The problem is that UTI has been unable to mobilise huge amounts in closed-end funds in the recent past and the result is that the Equity Opportunity fund and Index Equity fund are hardly traded. While UTI is expected to mop up the target of Rs 50 crore, Master Value is unlikely to be one of UTI's bigger funds. Thus, if you are convinced about the product, the IPOseems to have come at the right time. The catch is that you should have at least a five year investment horizon.

Value Research