Search the Internet          Tips  Sites: Finance, Investment

No deals in US-64, traders unsure of pricing

Trade in units of Unit Scheme-1964, the flagship scheme of the country's largest mutual fund manager, will not take off until there is a benchmark to help determine pricing, analysts said on Tuesday.

Unit Trust of India on Monday suspended sales and purchases in the US-64 fund, the nation's largest fund which accounts for about 15 per cent of the domestic mutual fund industry's assets of about Rs 900 billion.

This left investors only one exit route -- the stock market.

"For a trade to take place you need to know the value of the instrument," said Sachin Sawrikar, a portfolio manager with SBI Mutual Fund.

US-64's net asset value is not made public and its sale and repurchase price was, until now, was declared monthly by UTI. These prices were not directly linked to the market value of its portfolio.

The mutual fund, launched in 1964, has a special status in the industry and does not come under the purview of the Securities and Exchange Board of India like other mutual funds. It is governed by an act of Parliament.

Brokers said the last traded price for US-64, which is listed on the National Stock Exchange was Rs 14.95, the deal being struck on March 30 1999.

Analysts said the reason for the lack of trading activity was the easy access to UTI offices.

UTI's estimated 43 million investors can transact the units through its 54 branch offices and 75,000 officers.

"There was no reason for the investors to come to the exchanges to sell when they got the best price from UTI itself," said Sawrikar.

Tell us what you think of this report