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Repurchases of US-64 at Rs 1.1 bn from Aug 1

Rakesh P Sharma

The Unit Trust of India's flagship scheme, US-64, has seen repurchase requests for a little over 110 million units from about 87,000 unit holders aggregating around Rs 1.11 billion till today.

On an average, the number of units involved in a typical repurchase request is 1,500.

"This is half the repurchase limit (3,000 units) allowed under the exit window for small investors,'' a UTI official said.

In a normal year, July-August sees repurchases of Rs 500-600 million. Therefore, Rs 1.11 billion, even under the present extraordinary circumstances, is not a major outgo, the UTI official said.

US-64, which has around 1,100 scrips, has a unit capital of around Rs 128 billion.

"Only those who are in urgent need of funds would redeem immediately, otherwise it makes sense to hold on as we are assuring higher returns in the next 20 months," the official said.

Under the limited redemption scheme, UTI will offer investors a stipulated minimum price beginning at Rs 10 for August, and increasing by 10 paise per month to a maximum of Rs 12 in May, 2003.

In fact, the repurchase price from September is expected to increase to Rs 10.10.

From January or even early, the redemption price paid will be the higher of either the net asset value of the fund at the time the units are redeemed, or the stipulated minimum price for that month. Which means, an investor is promised at least a 12 per cent annual return over the next 20 months, before the addition of any tax-free dividend paid.

The flagship scheme would look at a certain measure of portfolio restructuring. On the equity side, it is currently lopsided, largely in favour of a few select sectors. The top few counters account for a sizable portion of the portfolio.

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