Unit Scheme - 64's reserves have recovered on the back of an explosive growth in infotech stocks over the past 12 months.

US-64 is Unit Trust of India's flagship scheme. It is the largest scheme in the country and is equal to a few mutual funds put together. Given the size of the scheme, US-64's buying/selling has a significant impact on the stock markets.

According to a report in a leading financial daily, US-64's reserves have surged to Rs 35.8 bn in 31st December 1999 from a negative Rs 26.0 bn in 31st December 1998. The strong showing is attributed largely to US-64's increased exposure to IT stocks.

The rise in net assets has given a big boost to US-64's net asset value (NAV) per unit, which now stands at Rs 17. Its sale price stands at Rs 14.50 per unit while its repurchase price is pegged at Rs 14.20 per unit. This implies that US-64 is selling at a 15% discount to NAV, compared to a scenario just 6 months ago when it sold at a premium of 21%.

Earlier US-64 had come in for a lot of flak, with large exposure to public sector units (PSUs) and commodity stocks. But scenario changed dramatically with UTI hiring professional managers to take stock of the situation. The management decided to churn its portfolio more frequently and target key stocks in growth sectors (IT, pharma). This has shown results, as is evident from the turnaround in US-64's reserves.

However, the bad news for UTI is that its competitors have shown more alacrity in taking exposure to IT and technology-driven companies. As a result, their NAVs have risen a lot more sharply than US-64's. Consequently, UTI's market share has eroded to below 70% from over 80% less than a year ago.

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