The Hindu : UTI Mutual Fund launches first liquid fund

Online edition of India's National Newspaper
Friday, Jun 20, 2003

Business

Business

UTI Mutual Fund launches first liquid fund

By Our Special Correspondent

MUMBAI JUNE 19. UTI Mutual Fund in its new `avatar' launched its first scheme, UTI Liquid Fund. This comes in the wake of requests from corporates and institutions to have a liquid fund that will offer them a short term parking space with a view to generating steady and reasonable income, with low risk and high level of liquidity from a portfolio of money market securities and high quality debt.

The initial offer period will be for two days from June 23 to 24 and the sale of units will re-open from June 27. The face value of units is at Rs. 10 per unit. The Fund is open to resident individuals, institutions as well as to NRIs , OCBs and FIIs.

"This is first in a series of many products we are planning to offer to investors,'' said M. Damodaran, Chairman and Managing Director of UTI Mutual Fund.

Announcing the launch of UTI Liquid Fund here today, he added that it was an open-ended income scheme which offered two plans, UTI-Liquid Cash Plan, which provides liquidity and adequate return and UTI-Liquid Short Term Plan, which provides higher return with a higher average maturity of investment.

The scheme will invest in debentures, bonds, commercial papers, corporate deposits and money market instruments such that not less than 65 per cent of the funds will be invested in money market instruments, not more than 35 per cent of the funds will be invested in debt instruments (including government securities) above credit rating of AA- or equivalent and above at the time of investment. However, the scheme will not invest in equity instruments.

The minimum investment is Rs. 1 lakh under the UTI-Liquid Cash Plan and Rs. 30,000 under the UTI-Liquid Short Term Plan, or such amount, as may be decided by UTI AMC from time to time. Subsequent minimum additional investment under both plans is Rs. 10,000 without any upper limit.

PTI reports:

UTI-I for early closure of schemes

The Unit Trust of India-I is planning to close four to seven assured income schemes earlier than the scheduled date due to the prevailing low interest rates.

"We are discussing with the Government for early closure of some schemes that are to mature after March 2004 as the returns assured were high compared to the current situation (low interest rate),'' UTI-I Administrator, M. Damodaran told newspersons here today.

Some of the schemes, which could be prematurely retired, include Monthly Income Plans (MIPs), he said adding "we have the right to terminate the scheme as they were launched when the interest rates were high. We are talking to the investors about such schemes.''

Mr. Damodaran pointed out that the final decision about early closure rests with the Government and "we also have the necessary court verdicts in our support.''

Whether it had enough funds for early repayments, the administrator said financial support from the Government would depend on the amount to be repaid after UTI-I arranges from within. Asked about the non-performing assets, Mr. Damodaran said under UTI-I and UTI Mutual Fund, the net outstandings was to the tune of Rs. 7,000 crores, one-sixth of which is under the latter as on February last.

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