The net asset value-linked segment of Unit Trust of India’s (UTI) flagship scheme, US-64, is to be transferred to UTI-II along with 49 other NAV-linked schemes of the Trust once the formal segregation of UTI into two distinct entities is formalised by the government.Official sources said that the NAV-linked segment of US-64, which went NAV-based from January 1, 2002, would be moved to UTI-II as part of the recast, while the administered prices segment of the scheme would remain in UTI-I, which has been envisaged as a kind of ‘sick box’ by the government. The assured return schemes would also remain with UTI-I as announced earlier.‘‘The name of the NAV-linked US-64 may even be changed once it moves to UTI-II,’’ the sources said. As reported earlier, the total sales by US-64 through the NAV window over the past eight months has been to the tune of Rs 96 crore, which means this segment of the scheme gets cut out of the total US-64 cake, of unit capital over Rs 12,400 crore, and moved to UTI-II.UTI-I, the sources said, would be left with 27 schemes while UTI-II would have 49 schemes, including six offshore funds. On the assured return schemes front, unless the government and the Sebi work out an early closure for them, some schemes are to be redeemed as late as 2021. This is the case with the Children’s Gift and Growth Fund (CGGF), which is to come up for redemption that year.However, there is considerable confusion on the aspect of how, if there is some redemption pressure, UTI-I will tackle that, since the government’s assurance is only limited to the shortfall between the NAV and the administered price. UTI-I will, perforce, be required to sell assets to meet redemption pressure but, at the same time, there now exists a diktat from the finance ministry that no ‘asset bleeding’ will be allowed. What exactly amounts to asset bleeding is not clear to many.Asks a fund manager: ‘‘If UTI-I gets a good offer to sell a particular stock, and then the price rises later, will that be asset bleeding? One does not know.’’ Meanwhile, UTI chairman M. Damodaran is now busy on two fronts. On one, he is continuously interacting with the finance ministry mandarins to put together the detailed contours of the complex restructuring package, while on the other, he is interacting with UTI staffers both within and outside Mumbai. Damodaran is believed to be keen to explain the implications of the recast to all UTI staffers across the country, to assuage any doubts and fears they may have about their own future and that of the organisation.
