Unit Trust of India's (UTI) US-64 net asset value (NAV) has appreciated by 24% to Rs 12.90 (on September 30) from Rs 10.40 on June 30, 1999. This was reported by a leading business daily.

UTI, with assets in excess of Rs 601 bn as on 31st August 1999, is India's largest mutual fund (MF). It accounts for 76% of India's MF segment. UTI commenced operations in 1964, with the launch of Unit Scheme 1964 (US-64), its flagship scheme. US-64 garnered approximately Rs 250 m in that year, and currently manages assets in excess of Rs 170 bn, which is larger than a few private mutual funds put together! Therefore US-64's buying and selling operations have a significant impact on Indian stock markets.

US-64's NAV rise is attributed to the recent surge in the BSE Sensex. (8 out of the 10 top stocks in US-64's portfolio are Sensex stocks). The appreciation in the NAV has narrowed down the gap between the US-64 NAV and repurchase price to just 7% from around 29% in June 30.

Last year, after the decline in market value of its investments had eroded its capital, US-64 had undertaken a portfolio restructuring exercise. It more than tripled its investments in fast-moving consumer goods (FMCG), information technology (IT) and pharma, (the golden triangle) sectors. Exposure in these three sectors has increased from 7.9% of net assets in June 1998 to 25% of net assets in June 1999.

As expected by market analysts, investments in the golden triangle have come at the expense of PSU stocks, which have been transferred to Special Unit Scheme-99.

However, assuming that US-64 portfolio has not changed since June 30, the current market value of the top 25 scrips seems to be lagging behind the Sensex. It appreciated only 19.2% over June-September 1999, while the Sensex has risen by 22%.

As disclosed by the UTI chairman, P S Subramanyam, US-64's sale/repurchase price will be aligned to its NAV before the three-year time-frame stipulated by the Deepak Parekh committee.

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