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UTI ups US-64 prices despite meltdown

BS Markets Bureau

Despite a fall in the portfolio of the Unit Scheme-64 (US-64), the Unit Trust of India has increased its sale and repurchase prices for the current month. The sale price has been increased to Rs 14.50 from Rs 14.40 in March. The repurchase price has been revised from Rs 14.10 in March to Rs 14.20.

This revision in prices is contrary to the prevailing trend in the market, where the net asset values of most funds have taken a big hit due to their exposure in the ICE sector, battered in turn by the Nasdaq crash and the on-going market crisis. UTI's US-64 prices are currently not linked to its net asset value and it is transacted at the sale and repurchase prices fixed by UTI every month.

Interestingly, in the February 2001 portfolio, the weightage of the ICE sector is down to 9.36 per cent from 13.85 per cent as on December 29, 2000. The scheme has liquidated holdings in NIIT, VisualSoft, Pentamedia Graphics and VSNL. On the other hand, the scheme's cumulative investment in Reliance Industries and Reliance Petroleum has reached a whopping 21.32 per cent, from 15 per cent in December 2000.

Apart from sale of the five technology stocks, which had a combined weightage of 1.93 per cent, its exposure has been reduced due to a sharp fall in the value of Himachal Futuristic, Global Tele-System and Zee Telefilms. The exit of US-64 from a handful of ICE stocks has helped little to check the post-Budget stock slide. The tech wreck is estimated to have eroded over 30-35 per cent or Rs 6.50-7.50 billion of the fund's cumulative ICE exposure.

Himachal Futuristic continues to be US-64's top ICE stock, its holding being 2.13 per cent against 3.29 per cent last December. The HFCL scrip, badly hit by the current slump, dropped almost 50 per cent from Rs 1,277 on December 30, 2000 to Rs 670 in February. That the stock's weightage in US-64 has fallen less than its price suggests that the scheme has purchased HFCL at lower levels.

The volatility in the equity markets is driving fresh investors in hordes to US-64, given its consistent dividend track record for the last 36 years. The number of new investors jumped by 52 per cent, from 159,000 to 242,000, in the year ended February 2001. Net sales of US-64 were at Rs 7.89 billion, up 63 per cent from Rs 4.85 billion in the corresponding period last year.

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