Mumbai, Dec. 23: State-owned UTI Mutual Fund hopes to rake in Rs 4,000 crore when its new fund offer (NFO) closes tomorrow.
If the collections match expectations, UTI Infrastructure Fund will be the biggest-ever closed-end equity fund.
The three-year closed-end fund — called the UTI Infrastructure Advantage — will also rank as the biggest infrastructure fund in the country.
We are expecting to receive over 7 lakh applications through the NFO. About 90 per cent of the money has already come from the retail investors. The collection is almost four times the other NFO collections by UTI in recent years, said Jaideep Bhattacharya, chief marketing officer of UTI Mutual Fund.
The UTI Infrastructure Advantage Fund-Series I will invest 65 to 100 per cent of its assets in equities.
The fund portfolio predominantly comprises entities in high growth infrastructure sectors such as airports, banking, construction, engineering, energy, mining, ports and power.
Besides equity-related securities, the fund will also consider investment in the derivatives segment. The fund has a minimum initial investment, of Rs 5,000 without any upper limit, and offers both growth and dividend options with a payout facility. There is no entry and exit load.
Considering the overwhelming growth potential of the infrastructure sector in India, funds related to the sector are poised to fetch good returns in the long run. This fund has also caught the attention of investors in the Gulf from where we have received about 40,000 applications, which would contribute 5 to 10 per cent of the funds initial corpus, Bhattacharya added.
However, UTI Infrastructure Advantage will rank only third in the pecking order when all categories of mutual funds are taken into consideration.
According to a study by Value Research Online, Reliance Equity Fund, an open-ended scheme launched on March 8, 2006, had mopped up about Rs 5,790 crore during its NFO.
The second on the charts is UTI Equity Fund, which had raised Rs 4,472 crore. It was floated on May 19, 1992 and was then known as the UTI Mastergain Fund. It had received 65 lakh applications — a record that still stands.
The open-end infrastructure fund from UTI is a better fund to invest in when compared with the UTI Infrastructure Advantage Fund. Being a three-year closed-end fund, the latter will pose more liquidity constraints, said Dhirendra Kumar, CEO of Value Research Online.
Among closed-end funds, SBI Infrastructure Fund Series I ranks second with an NFO collection of about Rs. 2,536 crore. The others on the totem pole are Tata Indo Global Infrastructure Fund (Rs 2,200 crore) and Reliance Long-Term Equity Fund (Rs. 2, 091.62 crore).
Infrastructure funds promise good returns in the coming years with the Planning Commission projecting investments of $ 475 million in the sector over the next five years.
At present, there are 15 infrastructure funds – and many more are likely to be floated next year.