The Hindu Business Line : UTI Mutual launches leadership equity fund

Mr U.K. Sinha (right), Managing Director & CEO, UTI AMC, and Mr D.S.R. Murthy, Executive Director, at a press conference in Mumbai on Tuesday. - Shashi Ashiwal

Mumbai , Jan. 3

UTI Mutual Fund on Tuesday announced the launch of a new equity-oriented scheme `UTI-Leadership Equity Fund', which will invest in leading companies in various sectors and industries.

Addressing a news conference here, Mr U.K. Sinha, Managing Director and Chief Executive Officer of UTI Asset Management Company, said the scheme plans to invest 65 per cent of the corpus in `leaders' and 35 per cent in `potential leaders' in various industries and sectors.

Mr Sinha said the launch was just the beginning of several new schemes that UTI AMC plans to add to its product basket to "satisfy the varied investment needs of investors." He said the UTI-Leadership Equity Fund scheme was expected to set new "benchmark" in terms of the amount collected from the investors.

Making a presentation on the need for such a scheme, Mr A.K. Sridhar, Chief Investment Officer, UTI AMC, said a back-testing on a portfolio of 35 companies, which are leaders in 34 sectors/sub-sectors, showed that these stocks outperformed the CNX MidCap 100 Index and the Nifty by a big margin during the period May 2003-Feb 2004 and in the calendar year January-December 2005.

The portfolio of leaders gave a higher return of 125 per cent in May 2003 to February 2004 compared to the CNX MidCap's 109 per cent and the Nifty's 98 per cent. Similarly, during January to December 2005, the portfolio of leaders gave 68 per cent returns, while the CNX MidCap Index and the Nifty gave returns of 33 per cent and 34 per cent respectively, said Mr Sridhar. The leaders also protect the gains in a falling market, he said, pointing out that the decline by the leaders was much lower compared to the other indices.

Even at the 9,500-range Sensex levels, Mr Sridhar said the India valuation was comparable to the emerging market. He said Indian markets are quoting at about 14 times the price to earnings ratio for the 2007 fiscal, said Mr Sridhar.

"Studies show that leaders give good returns in an economic upswing and are also able to withstand economic downswings better than other companies," said Mr Sanjay Dongre, Fund Manager of UTI-Leadership Equity Fund.

The new fund offer opens on January 9 and closes on January 30.