The Hindu Business Line : UTI Mutual to launch products for PSUs

New Delhi, Nov. 20 UTI Mutual Fund would be launching new products specifically for public sector companies, which have been allowed by the Government, to invest a part of their cash surplus in mutual funds.

“As per the existing rules, there should be at least 20 investors in a mutual fund and no single investor can have more than a 25 per cent stake. So we are looking at new products to meet their requirements,” Mr U.K. Sinha, Chairman and Managing Director, UTI Mutual Fund, said while addressing a workshop on investment of surplus funds by central public sector enterprises (CPSEs) organised by SCOPE.

The Government in August allowed navratna and mini-navratna CPSEs to invest up to 30 per cent of their cash surpluses in public sector mutual funds. According to estimates, the cash surplus with CPSEs is around Rs 3 lakh crore.

Mr Sinha said that equity investments have given an average return of over 20 per cent since the inception of the Bombay Stock Exchange in 1979.

The Indian Oil Chairman, Mr S Behuria, said that as compared to the returns on Government debt which do not cross 7 per cent on an annualised basis, the average return on diversified funds of UTI and SBI in the last three years have been over 40 per cent.

Thought-out strategy

He advised PSEs to adopt a well thought-out strategy of investments in mutual funds as these are subject to market conditions and therefore not guaranteed. “Small but careful investments in equity may deliver higher returns to the companies as compared to traditional avenues of investment. In order to minimise risk, one strategy may be to invest in diversified schemes of various established public sector mutual funds,” Mr Behuria added.

UTI Mutual Fund is also hoping to raise around Rs 4,000 crore through its latest infrastructure fund, of which Rs 400 crore is expected to come from overseas investors, especially West Asia. This is the largest new fund offer by the company before its proposed initial public offer that is expected by February next year.

Mr Sinha, however, declined to disclose the size of the IPO, saying it would be depend upon the share price to be decided by the market.