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Fund size no constraint, says UTI's Damodaran

Janaki Krishnan

The Unit Trust of India chairman M Damodaran says size is not a constraint while managing and administering the assets of the institution.

"Nor does the Sensex have to zoom to stratospheric levels for the (flagship scheme) US-64's net asset value to improve. However, fund administration and its management would be a function of volumes in the market," he said.

"If the volumes expand significantly then the fund size is not a problem," Damodaran said during an interview.

However, if the volumes went down or shrank or even remained static "then absolute fund size is a constraint if I'm moving in one direction, which is reducing my holdings in particular scrips," he said.

UTI's assets under management stood at around Rs 510 billion as on December 31, 2001, accounting for roughly 50 per cent of the total assets managed by the Indian mutual fund sector.

Much would also depend on the relative activity in the market between UTI and other institutional investors, especially foreign institutional investors.

Damodaran pointed out that it was possible that if the UTI were active in the market at a point of time when the volumes are low "then to that extent UTI is a bigger player in the market -- if the FIIs are not active in that particular period," he said.

In effect, according to the chairman, everything would depend on how the institution used its size to work for it. "We intend to see that it works to our advantage."

Responding to a question on the UTI's current activity, Damodaran said the market at present offered opportunities.

He said that arithmetical multiplications had been done to arrive at various levels of Sensex values - 7,000, 11,000 and so on -- which would take US-64's net asset value to Rs 10.

"The point I'm seeking to make is that we do not need to have the Sensex going to astronomical levels, but at much lower levels if we are able to play the market well. And along with a few bulk sales we will be able to get something closer to Rs 10 before the market reaches those levels."

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