UTI Mutual Fund launches UTI RGESS

UTI Mutual Fund (UTI) has launched a new close ended scheme “UTI Rajiv Gandhi Equity Saving Scheme”.  The New scheme has opened for subscription on February 9, 2013 and will close on March 8, 2013.

UTI Rajiv Gandhi Equity Saving Scheme (UTI-RGESS) is a qualified mutual fund scheme targeting investment under Government notified Rajiv Gandhi Equity Savings Scheme, 2012(RGESS).

The Logo of Rajiv Gandhi Equity Savings Scheme, 2012 was launched by Hon’ble Union Minister of Finance, Government of India,  Mr P Chidambaram in Mumbai on February 9, 2013.

UTI-RGESS is a close-ended passive index fund tracking S&P CNX Nifty Index with a tenure of 3 years from the date of allotment. The investment objective of the scheme is to invest in stocks of companies comprising S&P CNX Nifty and endeavour to achieve return equivalent to Nifty by “passive” investment.  The scheme will be managed by replicating the index in the same weightage as in the S&P CNX Nifty Index with the intention of minimizing the performance difference between the scheme and the S&P CNX Nifty Index in capital terms, subject to market liquidity, costs of trading, management expenses and other factors which may cause tracking error. The scheme would alter the scrips /weights as and when the same are altered in the S&P CNX Nifty Index.

Mr. Kaushik Basu, fund manager of the scheme said,”The objective of Rajiv Gandhi Equity Savings Scheme is to encourage the savings of the small investors in domestic capital market. To facilitate this investment UTI has launched a new close ended scheme called ‘UTI Rajiv Gandhi Equity Saving Scheme. UTI-RGESS provides an investment opportunity to new retail investors to invest in equity shares of blue chip companies comprising S&P CNX Nifty at lower cost. The scheme also provides opportunity for capital growth. The investment amount under the scheme will qualify for deduction under Section 80CCG of Income Tax Act 1961.”

Salient Features of UTI- Rajiv Gandhi Equity Saving Scheme

·         New Fund Offer Price: During the NFO, the units will be sold at face value of Rs.10/- per unit.

·         Tenure of the scheme: Three years from the date of allotment

·         Eligible Investors: The deduction under Rajiv Gandhi Equity Savings Scheme, 2012 shall be available to a new retail investor who complies with the conditions of the scheme and whose gross total income for the financial year in which the investment is made under the scheme is less than or equal to Rs.10 lakhs.

A new retail investor means the following resident individual:

a)Any resident individual who has not opened a demat account and has not made any transactions in derivative segment as on the date of notification of the scheme.

b)Any resident individual who has opened a demat account before the notification of the scheme but has not made any transaction in the equity segment or the derivative segment till the date of notification of the scheme, and

c)Any  resident individual who is not the first account holder of an existing joint demat account shall be deemed to have not opened a demat account for the purpose of this scheme.

In addition to the above the Scheme will also be available for investors who are not eligible under Rajiv Gandhi Equity Savings Scheme, 2012. The following categories of investors can also invest : resident individuals/HUF, institutions as well as to NRIs and FIIs.

·         Minimum Application Amount: Minimum Initial investment is Rs.5,000/- and in multiples of Rs.1/- thereafter under all options/plans.

·         Plans/ Options Offered: The scheme offers two Plans- Retail Plan and Direct Plan.

Both the Plans have Growth and Dividend option with payout.

·                                                                     Asset Allocation:

*Investment in the money market instruments will be kept to the minimum so as to be able to meet the liquidity needs of the scheme. Investment in money market instruments with maturity of upto 91 days

·         Load Structure during the NFO and on maturity:

Entry Load: NIL

Exit Load    :Not applicable

·         Redemption/Maturity: Redemption not permitted before maturity. The units of the scheme will be listed on the stock exchange after the closure of the NFO. Investor will be able to enter and exit the fund through transactions in the secondary market within 15 days of the allotment. The scheme will compulsorily without any further act by the investor be redeemed on maturity /final redemption date.

·         Benchmark Index:  S&P CNX Nifty