UTI Mastergain-now called UTI Equity Fund-is credited with popularising share investments among retail investors in India. It was launched in 1992 at the height of the Harshad Mehta-induced stocks boom. Mastergain made its debut as a close-ended fund with 65 lakh investors, a world record for an equity fund. Even today, with 10.45 lakh subscribers, the fund, which is now open ended, still has nearly twice as many investors as India's oldest equity scheme, UTI Mastershare. This despite an aggressive approach to investments, with fast churning of stocks and only four dividend payouts in the past 13 years. In comparison, Mastershare has paid regular dividends and has a defensive investment strategy.

With about 10 per cent returns in over a decade, Mastergain may not sound a compelling investment but its performance needs to be seen relative to other portfolios that may have been created around that time. Experts reckon most such portfolios will still be in the red. Mastergain collected a huge sum, all of which had to be deployed (80 per cent in equities) within six months. At that time, most stocks were at astronomical levels. Also, Mastergain's prospectus required that up to 25 per cent of its corpus be redeemed after three years of inception. As a result, the fund's NAV remained below its market price for years.

It is for these reasons that Dhirendra Kumar, CEO of Value Research, recommends that investments in Mastergain should be based on its performance only over the past two-three years. "Mastergain was launched when even stocks like Apollo Tyres were trading at Rs 10,000 a share," he says.

Mastergain's returns have been lacklustre compared to the-an investment of Rs 100 in April 1992 has grown to Rs 369.25 today, including the four dividends. That is less than even what an investment in NSCs would have yielded. UTI has now shifted Mastergain's focus to large caps. "Portfolio will be churned more often because the Sensex is at an all-time high," says Mastergain's fund manager, Paresh Sharma.

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

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