The Hindu Business Line : UTI to launch overseas fund by March-end

Aiming high
To invest in developed markets such as the US and Europe as well as in developing economies
Fund would try and use the annual investment limit of $150 million

New Delhi , Jan. 5

UTI Mutual Fund (UTI MF) plans to launch two new funds, including a Global Navigator Fund, by March-end. The Global Navigator Fund would be the first overseas fund of UTI MF, which is the country's largest mutual fund.

Overseas funds give an opportunity for domestic investors to diversify their portfolio and aim at higher returns in markets abroad. The UTI Global Navigator Fund would collect money from domestic investors and invest in foreign securities/ Global Depository Receipts (GDRs) and American Depository Receipts (ADRs).

Mr A.K. Sridhar, Executive Director of UTI Asset Management Company, told reporters that the UTI Global Navigator Fund would invest in developed markets such as the US and Europe as well as in developing economies, especially in South-East Asian countries. UTI MF is yet to obtain the capital market regulator's nod for the overseas fund.

Asked about the extent of investment, Mr Sridhar indicated that the overseas fund would try and use the annual investment limit of $150 million.

"We will aim to use the limit. If the limit is $150 million, we will use it," Mr Sridhar said on the sidelines of the roadshow for its two new fund offerings — UTI Capital Protection Oriented Scheme- Series I and UTI Long-Term Advantage Fund.

The Securities and Exchange Board of India on Thursday raised the overall limit for investments in ADRs/GDRs/foreign securities by the mutual fund industry to $3 billion from $2 billion earlier.

It also stipulated that individual mutual fund houses can invest in foreign securities up to 10 per cent of their assets under management as on March 31 of the relevant year, with an upper limit of $150 million per annum. UTI MF's assets under management at December-end 2006 stood at Rs 38,100 crore.

More offerings

Already, two overseas funds — Templeton India Equity Income Fund and Principal Global Opportunities Fund — are in operation. HSBC Mutual Fund has recently filed a draft offer document for the HSBC Emerging Markets Fund, which will invest in emerging markets. DSP Merrill Lynch Mutual Fund plans to launch its World Gold Fund, which will invest in gold mining companies in overseas markets.

On Gold ETF, Mr Sridhar said that SEBI's approval has been obtained and this product would be launched in about two months. He also hinted that UTI MF has tied up with a custodian for offering this product, but declined to go into the details.

Crisil rating

Meanwhile, Mr Sridhar said that UTI Capital Protection Oriented Scheme's portfolio structure has been rated AAA (SO) by rating agency Crisil Ltd.

This indicates highest degree of certainty regarding payment of face value of investment to unit holders on maturity. The capital protection product is a closed-ended scheme consisting of two plans — a 3-year plan and a 5-year plan.

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UTI Mutual scouting for global tie-ups

More Stories on : New Fund Offer | Mutual Funds | Overseas Investments

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