The Hindu Business Line : In the UTI world

FOR all the restructuring and consolidation it has gone through, UTI remains a fund house of gigantic proportions, complete with a labyrinth of schemes where an average investor can well lose his way. As things stand today, it manages a large number of funds, a number that has lately increased because of new launches and the acquisition of IL&FS MF's products.

Its top schemes apart, investors need to familiarise themselves with some of the special ones that form part of the UTI MF stable. We are referring to the likes of Unit Linked Insurance Plan, Retirement Benefit Pension Fund and SUNDER. There are a few others as well.

The last one first. SUNDER happens to be an exchange-traded fund - not the only EFT in the country - that provide returns closely corresponding to the performance of S&P CNX Nifty index. This is not the only index tracker in the UTI MF kitty; it also has two basic index funds mirroring the Nifty and the Sensex.

Retirement Benefit Pension Fund, if positioned properly, can easily become a key part in UTI MF's arsenal in the days ahead. This is a balanced scheme, which provides a `pension' to investors when they reach 58. It comes in the shape of a periodical cash flow, subject to the repurchase value of their holdings through the SWP route. SWP refers to systematic withdrawal plan.

ULIP, about the oldest scheme of its kind, allows individuals to get tax rebate under Section 88 of the I-T Act as well as a life insurance cover. This follows a blended investment strategy, with a minimum 60 per cent of the assets reserved for debt.

The market, one feels, needs to be really aware of ULIP, especially in the context of the advent of similar products launched by insurance companies. In fact, UTI MF may well think of special ways to promote its own product. A look at the expenses run up by the new-generation unit-linked schemes (vis-à-vis the expenses relevant in case of UTI ULIP) may be important here.

It is two early to state how any of these schemes will perform in the new year. One expects the country's no. 1 asset manager to consolidate its lead over its private-sector rivals.

The two ideas mooted by UTI in association with State Street Global Advisors are yet to be approved. Both are based on international indices run by Dow Jones. There is no definite signal from the government on them.

UTI's fund managers - particularly those who handle equity assets - have a lot of work to do. Size, after all, needs to be backed by performance.

Lastly, have you checked the returns generated by various classes of equity funds in recent times? Pharma funds have beaten all others over a one-year period ended January 7, posting about 32 per cent. Tax-planners and `normal' diversified equity funds come next, followed by the likes of FMCG and technology schemes. Going by the trend, investors will keenly track the performance of pharma funds in 2005.

Feedback may be sent to nilanjan@thehindu.co.in

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