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Wednesday, Aug 14, 2002

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UTI committedto investors — Damodaran bullish on stocks

Ashok Dasgupta
Sarbajeet K. Sen

NEW DELHI, Aug. 13

THE Chairman of the Unit Trust of India (UTI), Mr M. Damodaran, today gave a firm assurance of meeting all the commitments made to its investors. The current initiatives taken by the Trust - with adequate Government support - would help in restoring market confidence which, he said, would attract a fresh breed of investors to its various funds.

Mr Damodaran felt that the fresh investments would flow in through a new generation of investors who have a larger appetite for taking risks, apart from the institutional investors forming the bulk of the inflow into different new schemes in keeping with the times.

"We foresee higher institutional fund flow into the various funds as well as newer category of younger investors who would come with a slightly higher appetite for risk and who are not in our books right now,'' he said in an exclusive interview with Business Line.

Mr Damodaran, however, said that a large part of the retail investors might stay away in the short run in view of the lack of confidence in the market. "The retail investor will come back only if he has a little more confidence than he has at this point of time. He has to be clear that he is investing in a market in which he can get returns over a period of time,'' he said.

Stating that he was bullish about the stock market, he said that UTI would grab all opportunities that would come its way. "If we need to sell, we will sell, but in a manner in which the impact on the market will be minimal,'' he said.

He said that UTI's resolve to meet all its commitment was evident from the fact that the fund had, for the first time, attempted to protect the capital of investments on which the returns were not guaranteed, as in the case of MIP-95. This, he pointed out, would be done by periodic payments that would be made against the recoveries made under the scheme.

"Every commitment that has been given to the investor in any UTI scheme will be honoured. We have a couple of schemes where there is no protection of capital assured. We have sent the terminal values, but we are keeping our books open and whatever we get from the recoveries, we will be paying to the investors. It hasn't happened before,'' he said.

Mr Damodaran expressed confidence over the UTI's flagship scheme - US-64 - and said that he hoped that not many investors would exit from it on May 31, 2003, when the administered redemption scheme comes to an end.

He said that he had pinned his hopes on blue-chip holdings in the portfolio that can unlock great value for the investors, which include some PSU stocks coming up for disinvestment.

"Between now and May 2003, we hope to address the problem of negative liquidity. We have seen the portfolio. It has a large number of excellent scrips.

Many of them have good value, some of them will have much higher value when the disinvestment process gets going. So there might be a group of investors who might see value in staying with the scheme,'' he said.

The UTI chief hinted that he was still against privatisation of the Trust.

"Efficiency is a function of management and not of ownership. You have to restore the organisation to some degree of health before you can interest somebody to take a stake and to give you value for that,'' he said.

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