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More Confusion for UTI MF Investors

Court allows the AMC to wind up UTI Growth and Value Fund (Bonus Plan) and gives investors the option to either redeem or wait for the judgement

More confusion for the investors of UTI Growth and Value Fund (Bonus Plan).

In the hearing of Bajaj Auto's case against the UTI Mutual Fund, the Bombay High Court has directed the AMC to continue with the process of winding up of the scheme, as it did not comply with a SEBI regulation on investors' concentration.

While doing so, it has added another twist to the tale by giving the investors an option to either redeem the units or wait for the court's verdict. UTI has been asked to dispatch cheques to the investors. As per the court's order, the remaining corpus will be invested in scheduled commercial banks.

This is a problem for investors who had invested less than a year ago. If they decide to redeem, they may have to shell out the short-term capital gains tax. But if they decide to wait for the final decision of the court, they may miss out on the ongoing bull run.

The investors will be issued cheques on the basis of net asset value of the fund as of February 01, 2005, including any subsequent capital gains after deducting the expenses of winding up.

Bajaj Auto has challenged the AMC's decision to wind up the fund, as its investments were less than a year old and redemption would attract short-term capital gains tax.