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Two UTI funds declare dividend

Aabhas Pandya

Unit Trust of India has now declared a dividend in UTI Software and Masterplus-1991 funds. UTI Software has declared a payout of 22 per cent or Rs 2.2 per unit while the quantum of payout is Rs 1.5 per unit in Masterplus. This will be the second payout from both the funds. UTI Software had paid a 20 per cent dividend in February this year while Masterplus declared a payout when it had gone open-ended in July 1999. The dividends from both the funds will be tax-free for investors.

The record date for dividend in UTI Software is November 18 with book closure from November 13 to November 18. The fund had a net asset value of Rs 17.63 on October 11. Based on the latest NAV, the dividend yield works out to 12.59 per cent. The fund does not charge any entry load though it has an exit load of 2 per cent. Interestingly, the payout has gone up from 20 to 22 per cent even as the NAV of the fund has dropped by 40 per cent from Rs 31.02 on February 11 this year. The fund has a current size of Rs 2.45 billion and has given an annualised return of 61.35 per cent since its launch in June 1999. The fund is heavily concentrated with top five stocks accounting for 46 per cent of the portfolio. Infosys, the top holding, accounts for 19 per cent of total assets.

The record date for dividend in Masterplus is November 11 and the fund will close its books between November 6 and November 11. The diversified equity fund had earlier paid a 12 per cent dividend when the fund had gone open-ended. Based on the latest NAV of Rs 19.97, investment into the fund will yield an unimpressive 7.5 per cent. However, this is based on the current level of NAV if the NAV of the fund drops in the coming days, the yield will go up.

The fund also does not charge an entry load though it has an exit load of 3 per cent. Launched in December 1991, the Rs 7 billion fund has given an annualised return of 9 per cent. The fund's top holdings include Reliance Industries, ITC, Infosys, Hindustan Lever and Reliance Petroleum accounting for 45% of the net assets.

The dividends do not present a dividend stripping opportunity for the big-ticket short-term investor because of the market risk - there is a five day book closure. Add to it, redemption from UTI funds takes time, which only adds to the uncertainty.

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