The Hindu Business Line : UTI ULIP's asset base swells

THE country's largest unit-linked insurance plan, managed by UTI MF, has become even bigger, thanks to more investors moving into its fold. The trigger: Exemption under the newly-introduced Section 80C of the I-T Act as well as insurance coverage.

UTI ULIP's asset base is clearly on the rise;as on July 29, the fund size was close to Rs 3,900 crore, up from Rs 3,695 crore recorded on April 29.

The increase, it is felt, is partly a result of inflows triggered by a combination of factors - the surging market, the willingness expressed by some quarters to take advantage of the new tax norm and a decent performance turned out by the fund. Over seven lakh unit-holders are known to have their money in it.

UTI MF, in fact, has recently made a strong case for the fund by drawing the market's attention to the expenses involved. Unit-linked options, according to Mr D.S.R. Murthy, ED, may be "popular vehicles for insurance combined with investment benefits and tax-breaks". The important question is, how much does it cost in terms of expenses deducted by the insurance provider from the funds invested, he has pointed out.

UTI ULIP, it is mentioned in this context, happens to be a relatively low-cost fund with an expense ratio of 2.25 per cent - with life insurance cover up to Rs 5 lakh and accident insurance cover up to Rs 50,000.

There have been recent attempts by all insurance companies to offer unit-linked products, a trend that has seems to have caught on, thanks to large-scale marketing efforts by the insurance industry. However, these are not of the same stature as UTI ULIP.

As for investments, Mr Siddharth Dembi, Fund Manager, has underscored the ULIP's higher allocation to sectors such as telecom services, private-sector banking, MNC pharma and the like. "The equity portfolio has also been further consolidated. This should help the fund in tiding over any volatilities in the equity markets," he has stated.

The fund, it may be mentioned, has a balanced portfolio, up to 40 per cent of which can be allocated to equity and equity-related instruments. It was flagged off in 1971 - that makes it the oldest scheme in the unit-linked genre. The fund became NAV-based in July 2000. On September 1, the NAV was at Rs 14.7107.

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