The Hindu Business Line : UTI MF launches new schemes to mop up Rs 1,500 crore

The UTI Mutual Fund on Wednesday announced the launch of its two new schemes, Capital Protection Oriented (CPO) Scheme-Series One and Long Term Advantage (LTA) Fund, to target about Rs 500 crore and Rs 1,000 crore, respectively under the two instruments.

CPO scheme

Announcing the new schemes at a news conference here, Mr R. Raja, Senior Vice-President of UTI Assets Management Company Pvt Ltd, said the purchase of units under the CPO was available only during the NFO period from December 26, 2006 to January 25, 2007.

It is a close-ended scheme for three and five years plans from the date of allotment, respectively and endeavours to protect the capital by investing in high-quality fixed income securities as the primary objective and generate capital appreciation by investing in equity and equity-related instruments as secondary objectives.

With a face-value of units at Rs 10 each, its eligible investors will include NRIs and FIIs, with a minimum initial investment of Rs 10,000 for dividend option and Rs 5,000 for growth option and in multiples of Re 1 thereafter. Entry load will not be applicable and exit load will be nil, he added.

LTA fund

Under the LTA Fund, purchase of units was available from December 21, 2006 to March 20, 2007. It is a ten-year close-ended, equity-linked savings scheme with a redemption facility after an initial lock-in period of three years from the date of allotment, at relevant redemption price.

The investment objective of the scheme is to provide medium to long-term capital appreciation along with income tax benefits. Investments made in the scheme will qualify for deduction from gross total income up to Rs 1 lakh (along with other prescribed investments) under Section 80C of the Income-Tax Act, 1961.

Although this scheme is also open to NRIs and FIIs, tax benefits will be available only to individuals and the Hindu undivided families (HUVs). The minimum initial investment will be Rs 500 and in multiples, thereof, with no upper limit. However, tax benefits will be available only up to a maximum amount of Rs 1 lakh.

Options available

With both growth and dividend options available, the units can be purchased at the face-value of Rs 10 each for the ten-year duration. Upon maturity, these will stand automatically redeemed. The scheme will also offer redemption/switch out of units on first five business days on a monthly basis at the NAV-based prices after lock-in period of three years from the date of allotment (March 30, 2007).

There will be no entry or exit load. The redemption before expiry of 10 years from the date of allotment will be subject to an early exit charge.