In retrospect, 2000 was the year of Unit Trust of India. Apart from the sterling performance by some of the new generation sectoral funds, the mutual fund behemoth has seen investors flock to its flagship, US-64. Hit by a volley of negative returns from equity funds and volatility in debt schemes, investors are reposing faith in the 36-year old fund. In the first six months of its accounting year ended December 31, 2000, US-64 saw investment from 2.15 lakh investors, up 75 per cent from 1.23 lakh investors during the same period in 1999.
"The negative reserves of US-64 that created shock waves a couple of years back is no longer a concern. Investors are now looking at US-64 as a stable investment alternative, which also pays an annual dividend even though the yield is very poor,'' says the head of a leading mutual fund. While total sales under the scheme for the fist six months ending December 31, 2000 have gone up by 32% over the corresponding period last year, the net sales have rallied by 73%. On the other hand, aggregate repurchases are down by 4%. US-64 is transacted on monthly sale and repurchase prices, though it is expected to be NAV-based this year.
The AMC's other balanced fund, US-95 has been a topper among 23 balanced funds with a creditable return of 26%. Unlike its peers that went overboard on equities and especially technology, US-95 stuck to a conservative strategy with nearly 50% allocation to debt.
Besides fresh inflows in US-64, UTI's sectoral schemes have emerged on top in 2000. While UTI Services Sector and UTI Petro are two of the handful funds with positive returns for the calendar, its IT and pharma funds have also outperformed the category average and their respective benchmarks. Backed by its aggressive trading strategy and small asset base, Services Sector has been the top performer in the equity universe with a one-year return of 42%. UTI Petro too has been a stellar, driven up by its predominant exposure in Reliance Industries and talks of disinvestment in government owned oil companies.
While UTI Software was down 27% for the year, it nonetheless lost the least among its peers and even outperformed BSE IT Index by nearly six per cent. Ditto for UTI Pharma, which declined by only 18% against a 34% fall in BSE Healthcare Index. On the other hand, the Value Research category of pharma funds lost 27%.
While the new breed of UTI's funds has brought cheers for investors, the old guards continue to disappoint. The diversified equity funds from UTI's stable have lost anywhere between 15 to 33% (for Grandmaster). Besides, size no longer seems to determine the fate of returns since a fund like Mastergain (Rs 1147 crore) has lost nearly as much as UTI Primary equity Fund (Rs 93 crore). In fact, the worst hit, Grandmaster is the smallest of the lost with an asset base of only Rs 36 crore. No wonder, the old order continues to bleed even as the newly launched funds deliver and attract fresh inflows. Thus, the message is clear - perform and prosper!