US-64 to be dematerialised

UTI would be able to offer this facility to investors within the next couple of months, said P J Nayak, executive trustee, UTI, at a press conference here today. With about 35 per cent of the holding in corporate hands, the decision to dematerialise securities would work to investors’ advantage, he felt.

Of the 40-odd scrips available for demat on the depository, UTI would, to begin with, dematerialise 50 per cent of its holding in the 36 scrips in which US-64 had a significant holding, he said. Equity funds such as Mastershare, Mastergain and Masterplus would also be dematerialised, following US-64, he added.

US-64 had a marked-to-market corpus of Rs 18,000 crore and accounted for about one-third of the total corpus of all UTI funds put together. It had tilted its portfolio towards equity over the years, from a debt to equity composition of 70:30 in 1992-93, to 35:65 last year. However, this process had now been reversed owing to a prolonged bear phase in the equity markets and presently, this stood at around 39:61. The US-64 had given an effective yield of around 12.14 per cent for 1996-97. Its annualised ex-dividend NAV for 1995-96 was 15.5.

The scheme had declared a post-bonus dividend of 20 per cent for 1996-97.Elaborating on US-64’s `special offer’ for July, he said UTI had fixed the sale price for the month at Rs 14 per unit. This would be revised upwards every month and hence, July was when an investor could catch the bottom price, he said. It had set a target of about Rs 2,000 crore for the year, against Rs 1,097 crore received last year.

“The US-64 scheme has gained importance in the present environment of falling interest rates and rising equity markets. Fixed income securities may become less popular, while only a sustained rise in the capital markets can persuade investors to return. Till substitutions occur, investors will increasingly look for a vehicle to put their money in, and balanced funds like US-64 may be the right answer,” he explained.

In the meantime, UTI is planning to extend coverage of its new scheme, money market fund, to other parts of the country. The fund, which is projected as a substitute for bank deposit, is at present available only in Mumbai and Delhi. It will be shortly introduced in Bangalore and Chennai, P J Nayak, executive trustee of UTI, told mediapersons in Kochi yesterday. The fund has a 30-day lock-in period after which it can be repurchased.