Mumbai, Oct. 4: The Unit Trust of India (UTI) has decided to liquidate the India Growth Fund Inc (IGF), a premier closed-end fund listed on the New York Stock Exchange, in an attempt to enable unit holders to realise the net asset value for their shares.
The Unit Trust of India is the designated investment adviser for IGF, which is often considered the market barometer for Indian stocks.
The decision by the board of directors in New York on Thursday sent shock waves back home as market men feared the after-effects of the liquidation of assets would further enhance bearish sentiments on the bourses. What has given cause for greater concern is that the fund has sizeable holdings in Hero Honda, Hindustan Lever, ITC, Hindustan Petroleum, Nestle India, Reliance Industries, Dr Reddy’s Laboratories, BSES Ltd, Punjab Tractors and Sun Pharmaceuticals, which, in fact comprise its top 10 list.
One of the reasons for the decision analysts say, is that the fund’s stock has been trading below its net asset value and this led the board of directors to consider alternatives for it. Almost 95.5 per cent of the corpus was parked in equity investments with the balance invested in bonds, among others.
Meanwhile, IGF shares fell 9 cents or 1.2 per cent to $ 7.39 on the New York Stock Exchange on Thursday. Shares have traded between $ 7.05 and $ 9.70 over the past 52 weeks.
The Fund is a non-diversified, closed end management investment company registered in 1988 under the US Investment Company Act of 1940. The Fund, which commenced operations in August 1998, was designed for United States and other investors wishing to invest in the Indian economy.
Among the main investment objectives of the IGF is to seek long-term capital appreciation through investment primarily in equity securities of Indian companies.