Mumbai, Oct. 11: The Unit Trust of India (UTI) received a big shot in the arm when its new scheme — UTI Regular Income Scheme — scooped up around Rs 200 at close. Launched after a hiatus of more than two-and-a-half years, the scheme was an attempt by the mutual fund major to test market appetite for its plans after a turbulent period during which troubles in US-64 and a string of monthly income plans left investors unnerved. A government bailout shored up its finances later.
The resounding success has sent a clear signal that Unit Trust remains a force to reckon with in the mutual fund industry. According to initial estimates, the open-ended debt scheme, sans assured returns, scooped up Rs 200 crore since it opened on September 12.
“The collection figures from zonal offices are still being collated, and it could be close to Rs 200 crore,” said K. Madhava Kumar, a senior official of UTI.
The scheme’s good run has helped rekindle investor interest in a pure-debt scheme from UTI. It also puts to rest nagging fears expressed by doomsayers that investors would have lost confidence in the mutual fund major. Recently, the collective market-share of all private sector mutual funds was more than UTI. “It is very impressive,” said Dhirendra Kumar, an analyst tracking the Indian mutual fund industry. “UTI remains a big force and nobody can wish it away.”
Kumar pointed out that the Trust’s performance was more creditable given that other private sector funds usually mop up funds from high net-worth investors with very thin retail participation. More important, Unit Trust’s reach through its 54 branches spread across the country and its brand equity has ensured that the fears and negative reports about the mutual fund have not affected its standing, Kumar added.
He believed much of the money into the regular income scheme came from retail investors. Madhava Kumar, who is in-charge of marketing at UTI, was happy with the performance, but he said it was not unexpected.
UTI, he said, has attracted inflows to the tune of Rs 1750 crore over the past three months. The confidence, shaken by problems in US-64 and several MIP schemes, returned a little when the government stepped into provide the mutual fund with a much-needed cash infusion.
After today’s success, many say UTI will have the confidence to bring out more innovative schemes from its stable, such as its asset allocation plan called the UTI Variable Investment Scheme (UTI-VIS), Kumar said.
UTI Regular Income Scheme (UTI-RIS), is its first open-ended debt-oriented scheme with no assured returns. The scheme aims at distributing returns periodically and is open to resident individuals, institutions, as well as foreigners and overseas corporate bodies. The initial subscriptions for UTI-RIS was to sell units at face value of Rs 10 per unit with the minimum investment pegged at Rs 10,000 with subsequent investment in multiples of Rs 1,000.