The Unit Trust of India (UTI) is working out the modalities of enabling its investors to have a rollover option between its equity schemes. This was revealed by a leading financial daily.

UTI, with assets in excess of Rs 630 bn as on 31st September 1999, is India's largest mutual fund (MF). It accounts for 73% of India's MF segment.

UTI will initially allow the rollover option between select equity schemes. With the introduction of this option, investors in Equity Scheme I will be able to migrate to Equity Scheme II, and vice versa. Initially this option will be tested before extending it to other equity schemes. Later UTI will permit migration between a large number of equity schemes and even between debt and equity schemes.

Currently an investor in an equity scheme has to fill in a redemption request and wait for three days for the cheque before he can re-invest the funds in other equity schemes. In this period, if the net asset value (NAV) appreciates, the investor will have to enter at a higher NAV and will forfeit some gains.

Investor-friendly moves such as these is just what UII needs to cheer its investors. Currently, a large number of its equity schemes (MEP 91-96, Mastergain-92, and Master Plus-91) are witnessing redemption pressure, while US-64 is posting higher reserves (Rs 28.8 bn in September 1999) and is witnessing higher net inflows. This seems to imply that a lot of investors would be willing to migrate from poor performing equity schemes to US-64.

Another reason that may have prompted UTI to go for the rollover facility is that its peers in the industry are already offering it. UTI, the market leader, continues to take pointers from its smaller rivals, while it should actually have been the other way round.

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