UTI Mutual Fund has launched an NFO (new fund offer) of the UTI Equity Savings Fund. It will open on 13th August and end on 24th August. This hybrid fund is expected to generate income through various fixed income securities investments and also provide long term capital appreciation through various equity and equity-related investments. The UTI Equity Scheme is also expected to implement various arbitrage and derivative strategies in order generate returns for investors.
This new equity-oriented hybrid fund will be managed by V. Srivasta who currently also manages the UTI Hybrid Equity Fund as well as equity portfolios of various UTI Capital Protection Oriented Schemes and UTI Dual Advantage Fixed Term Funds. The UTI Hybrid Equity Fund earlier known as the UTI Balanced Fund features one of the largest AUMs (Rs 6,513 crore) among currently available hybrid funds in India.
Equity Savings Schemes maintain a gross allocation to equities over 65% in order to be classified as equity funds for tax purposes. However, the effective equity asset allocation for most funds is often lower due to implementation of various arbitrage and derivative strategies. In case of the UTI Equity Savings Scheme, the fund is expected to maintain net long equity position equal to 20-50% of total scheme assets.
The new scheme will be benchmarked against the weighted average of three indices – 40% CRISIL Liquid Fund Index, 30% CRISIL Short Term Bond Fund Index and 30% Nifty 50 Index.
The returns data of these three indices are as follows:
|Index||1 Year Returns||5 Year Returns|
|CRISIL Liquid Fund Index||7.08%||8.16%|
|CRISIL Short Term Bond Fund Index||4.29%||8.09%|
|Nifty 50 Index||12.70%||14.61%|
The 1 year and 5 year weighted average return of the benchmark of the UTI Equity Savings Scheme is thus around 8% and 10% respectively.
Key Details of the UTI Equity Savings Fund NFO
|Minimum Subscription||Rs. 5000|
|Fund Manager||V. Srivatsa|
|NFO Period||13th August to 24th August|
|Benchmark||40% CRISIL Liquid Fund Index, 30% CRISIL Short Term Bond Fund Index and 30% Nifty 50 Index.|
|Options||Growth, Monthly/Quarterly Dividend (Payout/Reinvest)|
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