Unit Trust of India

Establishment of Unit Trust of India

The Unit Trust of India (UTI) was established by the government of India on 1st February 1964 under the Unit Trust of India Act, 1963 (the bill was introduced by the then Finance Minister Sri.T.T.Krishnamachari).

The initial capital of UTI was ₹5 crores which was contributed by Reserve Bank of India (RBI), State Bank of India (SBI), Life Insurance Corporation of India (LIC), Scheduled banks and foreign banks. The management was entrusted to an independent Board of trustees appointed by the Government.


Objectives of Unit Trust of India

The basic objective of the UTI is to offer both small and large investors the means of acquiring shares in the widening prosperity resulting from the steady, industrial growth of the country.

There are two primary objectives of UTI:

  •  To promote and pool the small savings from the lower and middle income people who cannot have direct access to the stock exchange, and

  • To give them an opportunity to share the benefits and fruits of prosperity resulting from rapid industrialization in India.

Functions of Unit Trust of India

The main functions of UTI are as follows:

  • To encourage savings of lower and middle-class people.

  • To sell units to investors in different parts of the country.

  • To convert the small savings into industrial finance.

  • To give them an opportunity to share the benefits of industrialization in the country.

  • To provide liquidity to units.

Types of UTI Funds

UTI funds are classified based on the following two aspects:

Based on Maturity

Open-Ended Fund

An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices, which are declared on a daily basis. The key feature of open-ended schemes is its liquidity.

Close-Ended Fund/Scheme

A close-ended fund or scheme has a stipulated maturity period, say for example 5-7 years. The fund is open for subscription only during a specified period at the time of launching of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme through the stock exchanges where the units are listed.

In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV-related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual fund schemes disclose NAV generally on weekly basis.

Investment Objective 

Liquid Funds Category

  • UTI – Money Market Fund – It is an open-ended pure debt liquid plan, seeking to provide highest possible current income, by investing in a diversified portfolio of short-term money market securities.

  • UTI – Floating Rate Fund – It is to generate regular income through investment in a portfolio comprising substantially of floating rate debt / money market instruments and fixed rate debt / money market instruments.

  • UTI – Liquid Fund Cash Plan – The scheme seeks to generate steady & reasonable income with low risk & high level of liquidity from a portfolio of money market securities & high quality debt.

Income Funds Category

  • UTI – G-Sec Fund – Investment Plan – It is an open-end Gilt-Fund with the objective to invest only in Central Government securities including call money, treasury bills and repos of varying maturities with a view to generate credit risk free return.

  • UTI – G-Sec Fund – Short Term Plan – It is an open-end Gilt-Fund with the objective to invest only in Central Government securities including call money, treasury bills and repos of varying maturities with a view to generate credit risk free return.
  • UTI – GILT Advantage Fund -LTP – It is to generate credit risk-free return through investments in sovereign securities issued by the Central and / or a State Government LTP.

  • UTI – Variable Investment Scheme – It is an open ended debt oriented fund with 100% investment in Debt/G-sec. Investment can be made in the name of the children upto the age of 15 years.

  • UTI – Bond Advantage Fund – LTP – It aims to generate attractive returns consistent with capital preservation and liquidity.

  • UTI – Monthly Income Scheme – It is an open-ended debt oriented fund investing a minimum of 90% in Debt and G-Sec and a maximum of 10% in equity instruments. The fund aims to distribute income periodically and it is best suited to the investors.

  • UTI – Liquid Fund – Short Term Plan – The scheme seeks to generate steady & reasonable income with low risk & high level of liquidity from a portfolio of money market securities & high quality debt.

  • UTI – MIS – Advantage Plan – It is to generate regular income through investments in fixed income securities and capital appreciation / dividend income through investment of a portion of net assets of the scheme in equity and equity related instruments so as to endeavor to make periodic income distribution to Unit holders.

  • UTI – Bond Fund – It is an open-end 100% pure debt fund, which invests in rated corporate debt papers and government securities with relatively low risk and easy liquidity.

  • UTI – Capital Protection Oriented Scheme – The scheme will invest in a portfolio predominantly of fixed income securities that are maturing in line with duration of the respective plans. Each Plan will have a separate portfolio.

    The debt component of the portfolio structure shall have the highest investment grade rating. The equity components of the scheme will mainly focus on those companies / stocks that have potential to appreciate in the medium to long run.

Asset Allocation Funds Category

UTI – Variable Investment Scheme – The UTI Variable Investment Scheme is an open-ended scheme with dynamic allocation between equity and debt classes.

d. Index Funds Category

  • UTI – Master Index Fund – UTI MIF is an open-ended passive fund with the primary investment objective to invest in securities of companies comprising the BSE sensex in the same weightage as these companies have in BSE sensex.

  • UTI – Nifty Index Fund – UTI NIF is an open-ended passive fund with the objective to invest in securities of companies comprising of the S&P CNX Nifty in the same weightage as they have in S&P CNX Nifty.

  • UTI – Gold Exchange Traded Fund – Its objective is to endeavor to provide returns that, before expenses, closely track the performance and yield of Gold.

Equity Funds Category

  • UTI – Equity Tax Saving Plan – It is an open-ended equity fund investing a minimum of 80% in equity and equity related instruments. It aims at enabling members to avail tax rebate under Section 88 of the IT Act and provide them with the benefits of growth.

  • UTI – Master share unit Scheme – It is an open-end equity fund aiming to provide benefit of capital appreciation and income distribution through investment in equity.

  • UTI – Master gain Unit Scheme – Master Gain is open-ended equity scheme with an objective of investing at least 80% of its funds in equity and equity related instrument with medium to high risk profile and up to 20% in debt and money market instruments with low to medium risk profile.

  • UTI – Opportunities Fund – This scheme seeks to generate capital appreciation and/or income distribution by investing the funds of the scheme in equity shares and equity-related instruments.
  • UTI – Software Fund – It is an open-ended fund which invests exclusively in the equities of the Software Sector companies. One of the growth sectors funds aiming to invest in equity shares of companies belonging to information technology sector to provide returns to investors through capital growth as well as through regular income distribution.

  • UTI – Banking Sector Fund – It is an open-ended equity fund with the objective to provide capital appreciation through investments in the stocks of the companies/institutions engaged in the banking and financial services activities.

  • UTI – Master Value Fund – It is an open-ended equity fund investing in stocks which are currently under valued to their future earning potential and carry medium risk profile to provide ‘Capital Appreciation’.

  • UTI – MNC Fund – It is an open-ended equity fund with the objective to invest predominantly in the equity shares of multinational companies in diverse sectors such as FMCG, Pharmaceutical, Engineering etc.

  • UTI – Mid Cap Fund – It is an open-ended equity fund with the objective to provide ‘Capital appreciation’ by investing primarily in mid cap stocks.

  • UTI – Infrastructure Fund – It is an open-ended equity fund with the objective to provide Capital appreciation through investing in the stocks of the companies engaged in the sectors like Metals, Building materials, oil and gas, power, chemicals, engineering etc. The fund will invest in the stocks of the companies which form part of Basic Industries.

  • UTI – Leadership Equity Fund – This scheme seeks to generate capital appreciation and/or income distribution by investing the funds of the scheme in stocks that are “Leaders” in their respective industries/sectors/sub-sector.

  • UTI – Contra Fund – The fund aims to provide long-term capital gain/dividend distribution through investments in listed equities and equity-related instruments. The Fund’s investment policies are based on insights from behavioral finance.
  • UTI – Wealth Builder Fund – The objective of the scheme is to achieve long term capital appreciation by investing predominantly in a diversified portfolio of equity and equity related instruments.

  • UTI – Long-Term Advantage Fund – The investment objective of the scheme is to provide medium to long term capital appreciation along with income tax benefit.

  • UTI – India Lifestyle Fund – Its aim is to provide long term capital gain and/or income distribution from a diversified portfolio of equity and equity related instruments of companies that are expected to benefit from changing Indian demographics, Indian lifestyles and rising consumption pattern.

Balanced Funds Category

  • UTI – Balanced Fund – It is an open-ended balance fund investing between 40% to 60% in equality related securities and the balance in debt (fixed income securities) with a view to generate regular income together with capital appreciation.

  • UTI – US 2002 – It is an Open-ended balance fund scheme aims at providing income distribution/ cumulation of income and capital appreciation over a long term from a prudent portfolio mix of equity and fixed income securities.

  • UTI – Mahila Unit Scheme – It is an open-ended scheme is designed with a minimum 70% investment in Debt/G-Securities and a maximum 30% investment in equity. The fund is designed to provide an enabler to adult female persons in pooling their own savings and/ or gifts into an investment vehicle so as to get periodic cash flow near to the time of any chosen festival/ occasion or to allow income/ gains redeployed in the scheme and repurchase units partially or fully as and when desired.

  • UTI – Children’s Career Plan (Balanced) – It is an open-ended debt oriented fund with investment in Debt/G-Securities of minimum 60% and a maximum of 40% in Equity. Investment can be made in the name of the children up to the age of 15 years so as to provide them, after they attain the age of 18 years, to receive scholarship to meet the cost of higher education and/or to help them in setting up a profession, practice or business or enabling them to set up a home or finance the cost of other social obligation.

V. UTI – CRTS – This is an open-end income oriented scheme. The scheme aims at catering to the investment needs of charitable, religious, educational trusts and similar institutions to provide them an investment vehicle to avail of tax exemption and also to have regular income. VI. UTI – ULIP – This is an open-ended balanced fund with an objective of investing not more than 40% of the funds in equity and equity related instruments and balance in debt and money market instruments with low to medium risk profile. Investment by an individual in the scheme is eligible for exemption under section 88 of the IT Act 1961. In addition the scheme also offers Life Insurance and Accident Insurance cover. VII. UTI – Retirement Benefit Pension Fund – It is an open-ended balanced fund with a maximum equity allocation of 40% and the balance in debt. This ensures to provide pension to investors particularly self-employed persons after they attain age of 58 years, in the form of periodical cash flow up to the extent of repurchase value of their holding through systematic withdrawal plan.

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