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US-64 losses pegged at Rs 13 billion

Value Research/Aabhas Pandya

It's yet another cup of woes for Unit Scheme-1964. The ICE avalanche is believed to have shaved off over Rs 13 billion or 52 per cent of UTI flagship's investments in the technology sector, considering that its portfolio is the same as on December 31, 2000. The exposure, estimated at Rs 25.27 billion in December 2000, has seen a steep fall to Rs 12 billion with the tech-rout on the bourses.

US-64 had 13.5 per cent of its assets in technology stocks for December 2000, which is also the last available portfolio for the balanced scheme.

"The sharp fall in equities couldn't have come at a worse time since UTI plans to make US-64 net asset value-linked. If the sentiment does not reverse soon, UTI is likely to postpone the linking to NAV since a depleted NAV can trigger a panic. The government will take some urgent steps to restore market's confidence, also keeping US-64 in mind,'' says an official at a Bombay-based mutual fund. The fund is, currently, traded on a sale and repurchase price that changes on a monthly basis.

While the exposure to individual technology stocks is typically under 4 per cent, it translates to a sizeable absolute number, given US-64's size of around Rs 180 billion. Some of its top holdings include Himachal Futuristic, Infosys Technologies, Satyam Computer and Zee Telefilms. In fact, the fund giant has exposure to most K-10 stocks with holdings in Zee, Himachal, Satyam, Ranbaxy, Global Tele and Pentamedia Graphics. These stocks, excluding Ranbaxy, have been particularly hammered with an average loss of 66 per cent since December 29, 2000.

Among the fund's technology holdings, only Videsh Sanchar Nigam has been able to buck the trend with a gain of 1.75 per cent. However, the gain is paltry and cannot even marginally offset the huge losses on other technology stocks.

On the other hand, the fund is believed to have seen a sizeable appreciation in its holding in Reliance Industries, with the scrip vaulting by over 14 per cent to Rs 389 since December. US-64 owns a whopping 11 per cent in Reliance Industries, but here too, the gains are of little consequence with tech stocks falling like nine pins. The fund's other two prominent holdings, ITC and Reliance Petroleum have also seen a fall with an average decline of 19 per cent.

With the markets in a turbulent phase, it will be a tough task for UTI fund managers to declare US-64's NAV. Nonetheless, the volatility in both debt and 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 has seen a 52 per cent jump from Rs 159,000 to Rs 242,000 in one year February 2001. The net sales of US-64 were at Rs 7.89 billion, up 63 per cent from Rs 4.85 billion in the corresponding period in the last year.

US-64 Top Equity Holdings*	Net Assets (%)
Reliance Industries	11.17
I T C	5.23
Reliance Petroleum	3.96
Himachal Futuristic Communications	3.29
Infosys Technologies	3.07
Hindustan Lever	1.86
Tisco	1.84
State Bank Of India	1.74
Jindal Iron & Steel	1.62
Satyam Computer Services	1.56
* As on December 31, 2000

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