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UTI funds lose Rs 7.92 bn in ICE carnage

Aabhas Pandya

The carnage on the bourses has not only impacted UTI's flagship, US-64. The 29 open and close-ended equity funds of Unit Trust of India have lost assets worth Rs 7.92 billion in the ICE avalanche, which has rocked the bourses after the Budget. The cumulative tech exposure of these funds has seen a monumental fall of 41 per cent from Rs 19.53 billion on December 29, 2000 to Rs 11.61 billion on March 19.

For an idea of the impact of recent volatility, consider this. The UTI funds' exposure to Himachal Futuristic has dropped like nine pins from Rs 2.85 billion in December 2000 to a mere Rs 0.45 billion on March 19! The March figure is based on the assumption that there has been no change in the holdings since February 28.

The February portfolio of the equity funds reveals an aggregate investment of Rs 14.85 billion in technology stocks, which is 21 per cent of the combined corpus of Rs 72 billion on February 28, 2001. As many as 27 funds, excluding UTI Pharma and UTI Petro, have invested in the volatile sector and interestingly, hold a total of Rs 6.7 billion in the (in)famous K-10 stocks. Barring Ranbaxy Laboratories, all these stocks belong to the technology sector.

However, besides UTI Software, only a couple of open-end equity funds - Grandmaster and Services Sector - are overweight on the ICE sector. The duo have a technology exposure of 44 per cent and 48 per cent, respectively. No wonder, both funds have lost heavily in the tech melee during the last one year.

On the other hand, UTI's close-end funds strategically have a larger exposure to technology stocks since they can afford to take a long-term view on the sector with redemption still a few years away. The close-end tax saving funds, with their ten year tenure, are among the bullish lot with an average exposure of 32 per cent. Little surprise then, these funds have seen their net asset value erode by an average 33 per cent for the one-year ended February 28, 2001. The open-end tax plan UTI Equity Tax Saving Plan, however, has limited its technology exposure to under 23 per cent.

The ICE exposure is largely concentrated across frontline technology stocks like Infosys, Satyam, NIIT, MTNL, Zee Telefilms, Himachal Futuristic and Global Tele-Systems. For instance, the combined holding in Infosys is still a whopping 4.23 billion, though it has receded from its December level of Rs 4.91 billion. In fact, the fall is sharper post-Budget since Infosys had a total investment of Rs 5.98 billion on Budget day. On the other hand, Satyam Computer and MTNL today account for a total investment of Rs 1.7 billion and Rs 1.64 billion, respectively. The troika, thus, has a whopping weight of 65 per cent in the total technology exposure. Unit Trust of India's flagship, US-64 also holds a substantial stake in Infosys, Satyam Computer and MTNL.

Among unlisted stocks, as many as 17 funds have picked up a stake in telecom player, Global Electronic Commerce Services with a cumulative investment of Rs 329.6 million. A few close-end master equity plans and UTI Services Sector fund have a marginal holding in Galaxy Entertainment and portal Indya.com.

UTI EQUITY FUNDS' TECH EXPOSURE

(Rs crore)

Company	29-Dec	19-Mar	% fall
Himachal	285.54	44.84	-84.30
Global Tele	75.65	23.09	-69.48
Zee Tele	98.5	58.5	-40.61
Satyam Computer	228.28	170.19	-25.45
Infosys	491.07	423.02	-13.86

Source: Value Research

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