UTI Master Index fund, launched in June 1998 seeks to replicate the BSE-30 Sensitive Index. The fund available at NAV levies a 3% exit load.
UTI Master Index Fund passively tracks the BSE Sensex, with a proportionate investment in the 30 stocks as in the index. Thus, only in the event of the index undergoing a change, the set of companies in the fund will change. There has been three changes in the Sensex constituents, since the launch of the fund: First in November '98, when Arvind Mills, G. E. Shipping, IPCL and SAIL was eased out for inclusion of Castrol, Infosys Technologies, NIIT and Novartis. Second in April 2000, I.D.B.I, Indian Hotels, Tata Chem and Tata Power was excluded for Dr. Reddy's Laboratories, Reliance Petroleum, Satyam Computers and Zee Telefilms. And in January 2001, Cipla replaced Novartis (India).
Today, 30-stock constituent of Sensex include - A.C.C., Bajaj Auto, Bajaj Auto, BHEL, BSES, Castrol, Cipla, Colgate, Dr. Reddy, Glaxo (I), Grasim Ind, Guj Amb Ceme, Hindalco, Hindustan Lever, Hindustan Petroleum, I.C.I.C.I., Infosys Technologies, Larsen & Toubro , Mahindra & Mahindra, MTNL, Nestle, NIIT, Ranbaxy Lab, Reliance, Reliance Petrol , Satyam Computer , State Bank , Tata Engg , Tata Steel and Zee Telefilms.
On the positives, a Sensex tracker is well-diversified, large capitalisation equity vehicle enjoying highest liquidity in our market. Besides, more frequent changes in the Sensex constituents have reduced the risk of a laggard and an old leader still being part of the Sensex. Besides, the absence of clearly spelled portfolio strategy for most of our actively managed funds, Index Fund proves to be the only predictable portfolio you can own. However, an index fund by definition settles for being an average performer. Besides, a likely lower expense for an Index fund still does not show in performance.
The Master Index fund has very closely tracked the Sensex. The fund is a good investment for long-term capital appreciation.