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US-64 outperforms Sensex with NAV

Suresh Krishnamurthy

CHENNAI, Jan. 17

THE New Year seems to have started on a bright note for the investors in the Unit Trust of India's flagship scheme US-64. In the three weeks since US-64 started declaring its net asset value (NAV), the fund has outperformed the Sensex. From December 28 to January 16, the NAV of the scheme rose by 6.02 per cent. During the same period, the Sensex rose by 5.16 per cent. On December 28 last, UTI declared an NAV of Rs 5.81. On January 16, the NAV stood at Rs 6.16.

Interestingly, US-64 has outperformed select balanced funds that are managed by other mutual funds too. Funds such as Zurich India Prudence, HDFC Balanced, and Sundaram Balanced have registered lower returns. In contrast, funds such as Alliance 95 and Pioneer ITI Balanced have registered superior returns during the period.

The portfolio of US-64 at the end of December 2001 provides some insights. US-64 had 26 per cent of the portfolio in a particular government security - 11.24 per cent government security maturing in 2004. The prices of Government securities have generally appreciated since December 28. For example, the benchmark 2004 security has appreciated by 5.7 per cent during this period. The scheme could have also gained from its exposure to the Reliance group stocks.The fund had invested 14 per cent in Reliance Industries, 6 per cent in ITC and around 5 per cent in Reliance Petroleum. The stocks of Reliance Industries and Reliance Petroleum have turned in impressive gains of more than 5 per cent in the period under review. ITC gained close to 10 per cent.

Other balanced funds are generally less concentrated in their exposure to government securities or stocks of specific companies. In fact, some of these funds are under-invested in equity.

The US-64's performance since turning NAV-based is only over a three-week period.

It is not uncommon for schemes to post attractive returns for an extended period only to post steep decline in later years.

However, that the New Year has started on a bright note might bring some cheer to both the Government and crores of investors in the scheme.

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