The Hindu Business Line : UTI, State Street deal should throw up more choices

THE deal between UTI and State Street Global Advisors, formalised last week, will open a new chapter in the history of asset management in this country. The world's top institutional asset manager will act as an advisor to its Indian ally for overseas investments. That sounds simple; there's a lot more to it than just that.

One had the privilege of witnessing the signing ceremony in Kolkata - you really can't call it a big ceremony, it took just about a few minutes. All the same, one felt that investors, or at least a section of them, will soon be treated to the benefits of international investing. At the end of the day the UTI-State Street deal should translate into more choices for the individual investor.

As things stand today, we do not know the shape of the products that are likely to be worked out. In fact, Mr Meleveetil Damodaran, CMD of UTI MF, was completely tight-lipped when it came to answering reporters' questions about possible products. But he did indicate that the first product will soon be rolled out in the market.

State Street, given some of the figures that were tossed around, is a mammoth set-up, known for the solutions it provides to its clients across asset classes. All of this is spread over Rs 54 lakh crore - that's over a trillion USD - thanks to its presence in many important markets.

Investors in India will do well to do their homework before they actually make commitments to the new arrangement. Will international options really help them diversify? Will such options truly add value to their investment profiles? Are there new risks that must be considered right away? These are the questions that must be answered before investments are made.

Information on State Street Global Advisors will be available in its Web site, www.ssga.com, and prospective clients in India may take a look at it.

State Street incidentally, as a measure of caution, encourages investors to review its annual report and SEC filings in relation to the announcement of UTI MF tie-up. In official terms, important factors that could cause actual results to differ materially are mentioned in the company's annual report for 2003 (on form 10K) and other information filed with the securities regulator.

On another front, the new arrangement may be viewed as a part of the initiatives that have been thrashed out by the new-look, revitalised UTI MF. It has already made significant changes in the past one year or so, covering a number of critical areas that directly relate to investors.

A number of schemes have been reoriented, many portfolios have been realigned, new offerings have come about... . these will have to be strongly sustained in the days to come.

The market, however, still expects UTI MF to do a lot more in terms of investor services. Flawless services needs to be its top priority. An unhappy investor - one who has a complaint regarding time-consuming procedure or one who has not received a redemption cheque from the fund because of systemic errors - may well be UTI MF's worst enemy.

The 20,000-crore powerhouse and India's No 1 fund manager needs to create friends among investors, not enemies who will direct their money elsewhere.

Feedback may be sent to blcal@vsnl.net

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