US-64 mops up Rs 1,028 cr in July

S Muralidhar

Mumbai, Aug 10: The Unit Trust of India has managed to stem the tide against the beleagured US-64 scheme with inflows exceeding outflows substantially. Notwithstanding the reduction in dividend from Rs 2 to Rs 1.35 per unit, repurchases under the scheme have been limited to Rs 258 crore. With sales of Rs 1,286 crore, UTI has been able to mobilise Rs 1,028 crore under the scheme in July 1999.

Corporates are believed to have pumped in money into the scheme at July's sale price of Rs 13.50. The return (assuming that the dividend would be maintained at Rs 1.35) works out to 10 per cent tax-free. Last year (July 1998), UTI had collected Rs 4,000 crore from the US-64.

For UTI an outflow of a meagre Rs 258 crore this July is a positive factor that would help the restructuring of the scheme. UTI has already undertaken a major restructuring of its portfolio which is much healthier now. About 79 per cent of its equity portfolio is concentrated in the top 50 stocks with Reliance and ITC topping the table.

For August, UTI has fixed the sale and repurchase prices of US-64 at Rs 13.65 and Rs 13.35. Retail investors are unlikely to exit even at these prices, especially those who had entered the scheme at Rs 14 during July 1998. This has partly helped the trust contain the exit of retail investors from the scheme.

Overall, in July, UTI collected Rs 648 crore from all its schemes, net of repurchases. The total sales during the month was Rs 1,700 crore. Open-ended schemes mobilised Rs 30 crore. Among others, UTI Money Market Fund raised Rs 181 crore, UTI Bond Fund Rs 92 crore and Unit Linked Insurance Plan Rs 74 crore.

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