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US-64 suffers capital erosion

Ashok Jainani

MUMBAI, Nov. 6

THE largest scheme of Unit Trust of India, Unit Scheme-1964 (US-64), mobilised a little over Rs 1,250 crore in July and August. But its assets under management grew by a mere Rs 65 crore during this period, implying an erosion in capital new. UTI's finan cial year runs from July to June.

The net assets under management under US-64 was reckoned at Rs 20,593 crore as of June 2000. The value as of August 31 is at Rs 20,658 crore.

UTI is yet to disclose the value of assets under manufacturing as of September-end. The end of month values are normally disclosed in the first fortnight of the following month. But for the month ended September 30, UTI has, so far, not disclosed the por tfolio as it is awaiting approval from its executive committee, scheduled to meet only on November 16.

Despite repeated attempts by Business Line, UTI officials declined to reveal or confirm the extent of loss in US-64 portfolio or even disclose the figure of net assets under management as of September 2000.

UTI has fixed the sale price of US-64 units at Rs 14 and the repurchase price at Rs 13.70 per unit for November.

The company had earlier decided to adopt an aggressive approach, as opposed to diversified, for US-64 in the light of the rise in technology stocks to outperform the market. It had invested nearly 90 per cent of its equity investments (around Rs 12,600 c rore) in the shares of only 26 companies.

The list included 11 new-economy stocks, including Zee Telefilms, HFCL, SSI, Global Tele-Systems, Infosys Technologies, VisualSoft, SSI, NIIT and PentaMedia Graphics which suffered substantial losses during the period.

The fund managers decided in favour of a dynamic portfolio and assigned higher weightage to the then growing technology sector as its impact was visible on the performance of the US-64. The strategy was to bridge the gap between the NAV and sale price ah ead of UTI's deadline to make US-64 NAV-linked according to the recommendations of the Deepak Parekh Committee, independent sources said.

The committee had given three years, which expires in December 2001, to make US-64 NAV-based.