The Hindu Business Line : UTI Mutual readying for another round of consolidation

UTI Mutual Fund seems to be closer to effecting another round of product consolidation, an exercise that will be aimed at rationalising the number of funds it has in its stable. The fund house, which now manages over 40 products, is faced with the view that it has too many funds under its umbrella, some of them quite small in size. A few are even in the Rs 50-100 crore bracket.

Sources aware of the matter suggest that consolidation has been in the works for some time and the plan may be taken forward, at least partially.

Details - such as which funds are likely to be involved - are not available at the moment.

Rationalisation will enable UTI Mutual to offer a finer suite of products, complete with advantages such as better risk management and lower costs, it is felt.

The fund house has already done some restructuring in the recent past, sources mentioned.

It has, for instance, merged five funds (Grandmaster, US 92, PEF, MEP 98 and MEP 99) into what is now called UTI Opportunities Fund. The latter, positioned as a `dynamic sector allocation fund' currently manages about Rs 580 crore.

UTI MF, says Mr Rajesh Bhojani, President & Country Head, is at the same time working at product innovation, which has lately found reflection at a capital protection oriented fund and a ten-year equity linked savings scheme. The former is a first of its kind for the fund house, offering three- and five-year plans.

"Other funds will be rolled out in future. We have quite a few ideas. One of them relate to a Gold ETF. Also, a product christened Global Navigator Fund has been mooted," he mentioned.

UTI MF's current crop of funds includes a clutch of sectoral funds. These pertain to software, pharma, auto, banking and petro.

Besides, there are funds that restrict their investment universe to multi-nationals and PSUs.

It also allocates to themes like leadership, dividend yield, infrastructure and the like.

Midgets in the family

The UTI MF family of funds includes quite a few pigmy-sized products, which do not compare favourably with giants such as Unit Linked Insurance Plan (which has close to Rs 4,000 crore) and Children's Career Plan (which has over Rs 2,500 crore in the balanced option).

The funds with low asset-bases include Large Cap (Rs 28 crore), PSU (Rs 21 crore) Mahila Unit Scheme (Rs 84 crore), Variable Investment Scheme (Rs 36 crore) and Master Index Fund (46 crore), India Advantage Equity (Rs 59 crore). These figures pertain to November 30.

The sector-specific products - labelled under Petro, Pharma & Healthcare, Software, Auto and Banking - are not too large either.

Petro is the largest, with Rs 191 crore under management, followed by Software, which has Rs 134 crore.

On the debt side too the MF has a few small-sized funds. UTI Gilt Advantage Fund, for instance, has Rs 56 crore, while UTI Bond Advantage Fund has Rs 21 crores under management.