Nilanjan Dey

To leverage its tie-up with Shinsei Bank of Japan

Kolkata June 18 UTI Mutual Fund is planning to take its tie up with Shinsei Bank to the next level, beyond Japan.

It intends to draw on the Japanese bank's influence in other markets in Asia. The idea is to offer its fund, one that has so far attracted over $300 million from investors, in these markets as well.

UTI Mutual Fund is exploring the possibility of widening the scope of its association with a view to reach out to some of the countries where Shinsei has a strong presence, said Mr Jaideep Bhattacharya, Chief Marketing Officer, UTI Mutual Fund.

"The broad proposal is to tap Shinsei's strengths elsewhere," he said, while referring to the open-ended Shinsei UTI India Fund. The latter enables investments in stocks listed on Indian exchanges.

The two partners had, in November last year, announced the partnership, which required the Japanese outfit to distribute India-specific investment products managed and advised by UTI to Japanese investors. The latter, it was pointed out, would get an opportunity to enjoy India's mid- and long-term growth. More specifically, it considered local investors UTI Mutual Fund's products through Shinsei Investment Management Co, a wholly-owned subsidiary.

Shinsei, which offers institutional and retail banking as well as consumer and commercial finance, had $84 billion in total assets on a consolidated basis in June 2006. The fund in question - the initial offer period was in early December - has more than $300 million with it at the moment. Its investment objective is to grow the assets with a medium- and long-term perspective.

The structure, as Shinsei had earlier pointed out, is two-fold: The Mauritius-domiciled Shinsei UTI India Fund (Mauritius) Ltd, Class A investment securities, which invests chiefly in Indian equities, and the Shinsei Short-Term Mother Fund, is mostly exposed to Japanese short-term corporate and government bonds and Japanese money market instruments.

No forex hedging

Generally, no foreign exchange hedging will be done, Shinsei had stated, adding that the BSE 100 will be taken as a reference in the investment fund. Incidentally, the sales fee payable to the Japanese bank was 3.15 per cent (3 per cent before tax).

The latest move, Mr Bhattacharya indicated, gels with UTI MF's plan to step up international presence, for which talks have been held with several institutions. In recent years, the fund house has worked out initiatives with a few international players, including State Street Global Advisors.

However, the tie-up with State Street, which led to the mooting of two index-based funds, did not register much progress.

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