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US-64 sheds Rs 20-billion equity in 8 months

Rakesh P Sharma & Janaki Krishnan

The Unit Trust of India has sold equity worth Rs 20 billion from the portfolio of its flagship US-64 scheme in the last eight months of its financial year. UTI follows a July-June accounting year.

UTI executive director D S R Murthy said that the fund managers had been using the volatility in the markets to book profits and to exit.

The bulk of the equity sales was accounted for by big-ticket sales, Murthy pointed out. In other words, the mutual fund has been selling from its substantial holdings in the stocks of various companies. A minuscule portion was due to the UTI exiting "marginal holdings."

The flagship US-64 has holdings in a large number of stocks which are traded thinly and the UTI has been attempting a gradual exit from these stocks.

"The sale has very little impact on the scheme's fortune," Murthy said. At present, the number of companies in US-64's portfolio stands at 978 compared to 1,278 on July 1, 2001.

As on May 31, 2002, US-64's equity exposure stood at around 60 per cent. Under the revised investment pattern for US-64, UTI had announced that the fund would invest up to 75 per cent of the assets in debt instrument while the investment in equity would vary between 25 and 55 per cent.

Murthy added that the composition of debt and equity could vary due to changes in the equity markets. "The portfolio has appreciated," he said. "Though to what extent we are still in the process of computing."

Commenting on the how the UTI's other equity schemes fared in terms of inflows, Murthy said the mutual fund had fared well looking at the overall market conditions.

"The extreme volatility in the stock markets and government securities markets had affected the overall inflows," Murthy said.

The UTI manages 26 equity schemes with assets of Rs 72.90 billion.

Murthy pointed out that the UTI's two index schemes - Index Select Fund and Nifty Index Fund - have seen the maximum inflows and outflows in tune with the fluctuation of the stock markets.

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