Business Daily from THE HINDU group of publications
Tuesday, Mar 13, 2007
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Business Daily from THE HINDU group of publications Tuesday, Mar 13, 2007 ePaper |
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Mutual Funds Markets - Mergers & Acquisitions Our Bureau
Kolkata March 12 UTI Mutual Fund (MF) has proposed to merge a cluster of equity funds, most of which are small in size, with three of its more focused products - Index Select Fund, MNC Fund and Mid Cap Fund. The funds to be merged under the restructuring exercise are: PSU Fund, Large Cap Fund, Brand Value Fund, Growth & Value Fund, Dynamic Equity Fund and India Advantage Equity Fund. The fund house, in a notice to unit-holders, has announced book closures; the dates range from April 12 to April 26. The dates of allotment have been set between April 11 and April 19. PSU Fund and Large Cap Fund, which have Rs 20 crore and Rs 28 crore respectively under management, will be merged into the Index Select Fund. The latter, with Rs 241 crore, invests in stocks constituting the BSE Sensex and the S&P CNX Nifty and has, according to the February fact sheet, provided 22.39 per cent return since inception in May 1997. Brand Value Fund, which is part of UTI MF's `Growth Sectors Funds' bouquet and has Rs 65 crore to manage, will be merged with MNC Fund. The latter, which has delivered 19.13 per cent since inception in April 1998, has Rs 164 crore under management. Three funds - Growth & Value, Dynamic Equity and India Advantage Equity, with Rs 169 crore, Rs 150 crore and Rs 60 crore respectively - will be merged with Mid Cap Fund. The latter, with Rs 93 crore under management, has given 40.26 per cent since inception in March 2004. While NAVs will be assimilated arithmetically for those willing to migrate to the new funds, UTI MF will need to provide unit-holders concerned an exit window: the option to redeem their holdings at the prevailing net asset values without incurring any load. Investors are being individually informed with details of the merger in line with regulatory requirements, the fund house said. UTI Technology Services and Karvy Computershare, both registrars, will be involved in the process. Many of the funds proposed to be merged are currently quite small in size. Some have been trailing their benchmark indices of late. Large Cap Fund and India Advantage Equity Fund, for instance, are both trailing their benchmarks - the Sensex and the S&P CNX 500 respectively - considering their compounded annualised returns for the last one year. The latest restructuring proposal follows certain similar decisions taken earlier by UTI MF. One pertained to the merger of five schemes, including Grandmaster and US 92, into what is now known as UTI Opportunities Fund, which has Rs 558 crore of assets under management. Elsewhere in the MF industry, quite a few mergers have taken place in the past, many of them prompted by the need to brush up product portfolios by combining small funds with larger ones.
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