The Hindu Business Line : UTI thematic funds go below par

FOR the first time since their launch in April, all the six thematic schemes managed by UTI Mutual Fund are quoting at net asset values of less than Rs 10.

The decline has been caused by the sharp drop in the stock market, as reflected in the 340-point fall in the Sensex over two days.

UTI Thematic Fund separately focuses on half a dozen issues. These are: Large cap, mid cap, basic industries, automobiles, public sector undertakings and banks. As on May 11, their NAVs are respectively Rs 9.07, Rs 9.98, Rs 9.11, Rs 9.51, Rs 9.30 and Rs 9.51. These valuations are actually the lowest ever logged by the schemes so far.

The situation has not spared other equity funds, many of which have come off significantly from their recent highs. As investment circles indicate, the declining NAVs will not go down well with UTI MF clients, including new ones who may have entered the market for the first time through these schemes.

For the record, UTI Thematic Fund had garnered a fairly decent response, thanks to the retail money that came in during the IPO period.

Over Rs 300 crore was mobilised from more than 80,000 subscribers, the MF had pointed out earlier.

The decline in the two most popular schemes may be worth recording. The auto sector fund, which had proved to be best on this front (going by the sheer number of investors), has moved down from its high of Rs 10.27 to the May 11 level of Rs 9.51.

And the PSU fund, which had registered the highest collection, has dropped from Rs 10.29 to Rs 9.30. It may be mentioned here that UTI MF, which aims to be the common Indian's entry vehicle to the capital market, had restated the significance of retail investors during the IPO.

The MF's CIO, Mr A K Sridhar, had observed that a few segments of the economy were likely to function better than the others at any given point.

For a fund manager, spotting these areas at the initial stages was an important task and the MF hoped to home in on opportunities that were expected to arise in various sectors.