Grihalaxmi Unit Plan '94, launched in August '94 by UTI for investments in the name of women, has been suspended for fresh investments since early 2001. Existing investors can repurchase their units during such times as announced by UTI after a minimum period of three years in the fund or on maturity after 30 years. The fund seeks to have a portfolio with not more than 40% allocation to equities and the balance in debt instruments.
Grihalaxmi Unit Plan '94, in its tenure close to seven years has turned a lackluster performance with an annualised return of 7.63%, assuming reinvestment of the four dividends aggregating to 45.62%. With portfolio disclosures made available only since June 1998, the fund has largely been passively managed with a debt heavy portfolio. While, no information is so far available on the credit quality or the maturity profile of the debt instruments, the passive management indicates that the fund largely looks at interest income rather than trading profits from active management.
On the equity front, the fund sought a diversified portfolio with a tilt towards cyclical stocks. This became a drag on the fund's performance until the rising equity markets of 1999 aided it to firm the returns to 30% in the year as against single-digit gains till then. However, the incremental gains from stocks soon turned negative with equity markets coming under a battering in 2000 and the fund was left with a net gain of 9%, thanks to its debt portfolio. However, in the current year, despite the diversified equity portfolio, the sustained falling markets have inflicted losses much more than what it's debt portfolio could cushion.
Given the debt orientation, the fund carries a limited downside risk. However, the fund's lack of credible strategy for its equity portfolio would do it more harm than boosting the returns. Investors conservative on the risk factor would do better to opt for medium-term debt fund and those with a higher appetite for risk can go for a conservative balanced fund with a performance track record.