US-64 could be NAV-linked by October
Mumbai--Unit Trust of India plans to link its flagship scheme US-64 to its net asset value (NAV) by October, ahead of the stipulated deadline of January 2002 according to M Damodaran, chairman UTI.
UTI hopes that by the time US-64 is made NAV-linked its net asset value will have gone up to a healthy level.
The UTI chairman also expects the market to look up by that time and said that the economy downgrade (by Moodys and Standard and Poors) had virtually no impact on the market, which was sure to look up over the next 2-3 months.
He added that US-64 scheme was also being restructured which was due to begin around the time it was linked to the NAV.
There are currently plans to reduce the number of scrips to which the Trust is exposed from the present level of more than 1000. UTI is also planning to increase its exposure to good quality debt paper.
Beyond US-64, UTI plans to give a face-lift to all existing schemes such as offering add-ons to the schemes. Said Mr Damodaran, "There will be new options offered to investors. For instance, a growth scheme may be added, with new features like liquidity and so on. Moreover, we are also working on plans whereby an investor will be given the option of switching from one particular scheme to another," he said.
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UTI takes a hard stance with corporates
Mumbai-- Unit Trust of India chairman M Damodaran has told companies that have failed to clear interest payment overdues on debt papers that they have to pay or face the consequences.
UTI is ready to roll out an aggressive recovery strategy next week to contain its swelling non-performing assets (NPAs). The Trust plans to even press for a change in managements in corporates that are not ready to clear their dues.
The net NPA of UTI is estimated at over 9 per cent and in absolute terms, the sticky debts amount to Rs 2,672 crore as on June 30, 2001.
The mutual fund is adopting a multi-pronged approach to recover sticky assets. On the one hand it is taking stock of the collateral, which can be sold to realise dues and will move the debt recovery tribunals and attach the property of defaulters. UTI is also in talks with banks and financial institutions where defaulting corporates have overdues.
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UTI in major internal shakeup, targets investors with new schemes
New Delhi--Unit Trust of India (UTI) plans to announce new mutual fund schemes targeted at specific categories of investors.
It is also expects to announce modifications in existing schemes.
UTI chairman M Damodaran said that it was a good time for launching some equity schemes but did not specify the exact timing of the launch saying that it will be within the next two months. He said existing schemes would also be modified and the changes would be announced this month. The modifications would be done to the advantage of investors, and added that the organization is working out a strategy to improve its image and regain investors confidence after the problems it faced in the US-64 scheme.
UTI seems to be in the midst of a major shake-up at the top level with old hands making way for younger and newer talent.
The two key areas of focus for Mr Damodaran are the fund management and equity research cell. Poor fund managements has been one of the weak areas at UTI which inflicted losses of thousands of crores in equity investments. The role of the equity research cell is also being strengthened.
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Markets unaffected by downgrade
MumbaiAs expected by analysts the financial markets did not react to the downgrading of Indias outlook by Moodys Investors Service and Standard & Poors (S&P) over the last two days.
Govrnment security prices went up marginally and the rupee remained stable and closed around the same level as it did yesterday against the dollar. The benchmark Bombay Stock Exchange share index ended up 17 points higher to 3,319.61 points. Equity prices remained stable as traders saw the rating revisions having little impact on foreign fund inflows.
Prices of government securities market rallied by 10-15 paise across all maturities. Money market dealers said that they read the Moodys downgrading announcement as a follow-up of S&P's and were not affected by it.
Reserve Bank of India (RBI) governor Bimal Jalans statement that the central bank maintained its softening interest rate bias despite the announcements by Moodys and S&P also propped up confidence in the gilts market.
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Indian bourses less speculative than global counterparts
Mumbai-- In the last four months, Indian stock markets have become less speculative than their counterparts in the global arena. The various reasons cited for this include a drastic fall in prices of stocks and drying up of liquidity.
This has resulted in the slippage of the ratio of turnover to market capitalisation during the last few months. The severity of speculation is measured by the ratio of turnover to the market capitalisation (M-cap).
The M-cap of Indian bourses has slipped to around 7.6 per cent The Indian bourses were second in the list of speculative stock exchanges across the world as per this ratio and have now slipped to sixth position after NYSE (New York Stock Exchange).
During the month of April, though the domestic markets were witnessing troubles from different quarters the going was good for them. Indian bourses recorded an average monthly turnover of Rs 2,25,167 crore and the average M-cap was Rs 7,96,508 crore in April 2001.
As per these figures, the turnover to M-cap ratio was 28.81 per cent, next only to the most speculative and tech-heavy bourse Nasdaq, which clocked the ratio of 33.39 per cent.
Nasdaq clocked an average monthly turnover of $16,49,900 million and the average M-cap during the month of April was $59,845,906 million.
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Sebi norms on investments irk mutual funds
Mumbai-- Some mutual funds (MFs) are planning to make a representation against Sebis proposed norms that control MF investments as they feel the norms are too stringent.
Sebi has made it mandatory for a fund, categorised as debt or equity, to invest at least 70 per cent of their assets in prescribed class.
Balanced funds would be allowed to maintain a 60:40 ratio. Further, gilt funds would have to keep 70 per cent in government securities. All MFs would have to maintain this level for 30 weeks.
The fund managers have maintained that there should not be any period limitation for the MFs to be in cash and they should have the liberty to go into cash when the market is going down, particularly in gilt and liquid funds.
Their argument is that when the market is extremely volatile, MFs can avoid erosion in the NAV of their schemes by going in for as much as 60-70 per cent cash.
For instance, before the interest rate went down on July 21, some of the MFs were able to protect the NAV by going 70-80 per cent in cash.
The other advantage for holding cash is that when the markets are down and sometimes there is a redemption pressure on the fund, the MF, which is holding cash, does not need to sell in falling markets in order to meet it.
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