The jewel in UTI's crown-Mastershare-was the first pure equity fund in India. The harbinger of the equity cult, the scheme made its debut as a listed close-ended fund in 1986. Close-ended schemes are not open to redemptions, but since it was listed investors could buy and sell Mastershare units on stock exchanges. The fund became open ended in 2003.

Ask any of its 5.25 lakh investors why he invested in Mastershare and his first reason is likely to be the uninterrupted dividend history for 19 years. This is quite a feat; most funds have skipped dividends in times of adverse market conditions. If the first investor in Mastershare is still holding his units, he has received Rs 52.26 per unit (of Rs 10) in dividends alone. Add to that the appreciation in the capital invested at an annualised rate of 15 per cent and the three issues of bonus units in 1991, 1993 and 1995, and the wealth created is Rs 120 per unit.

Primarily a large cap fund anchored to the Sensex, Mastershare has shown signs of adapting to the times. In the past two years, it has invested in companies with market capitalisation of Rs 75-750 crore. Today, mid-caps comprise 5-7 per cent of its portfolio. "It is remarkable how Mastershare's portfolio has changed. It was saddled with PSU shares when no one wanted to touch them, but these holdings turned out to be money earners," says Value Research CEO Dhirendra Kumar.

UTI is redefining the investment strategy for the fund. It wants to maintain the dividend discipline and the low volatility character, but will have more leeway for stock selection. "The sector composition of the portfolio will broadly resemble that of the Sensex, but with a leeway of 5 per cent," says Sanjay Sinha, Mastershare's fund manager. Though past performance is never an indication of the future, UTI hopes to make an exception.

The above information and analysis is only for reference and should not be taken as a recommendation

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