UTI AMC – India’s oldest mutual fund with AUM of nearly ₹20 lakh crore to keep an eye on!


Unit Trust of India AMC: Have you ever paused to consider where your retirement contributions go, or how companies raise the capital they need to innovate and grow? The answer lies with asset management companies, the often unseen architects of financial stability and economic prosperity. These institutions act as custodians of crores of rupees, meticulously managing a vast pool of resources that fuel individual and national well-being.

But what exactly do Asset Management Companies do? They take the money entrusted to them by individuals, pension funds, institutions and invest it across a diverse range of assets. This could include stocks, bonds, real estate or even alternative investments like venture capital.

Their expertise lies in careful selection and strategic allocation, ensuring  a balance between maximising returns and mitigating risks. By placing your savings in the hands of skilled professionals, AMC allows you to participate in the growth of the broader economy, without the time commitment or in-depth knowledge required for independent investing.  

Unit Trust of India (UTI) AMC

UTI Asset Management Company (UTI AMC) is a leading Asset Management Company in India that primarily focuses on investment management and related services. UTI AMC is the oldest mutual fund in India and a trusted household brand. It is a pioneer in the Industry, being the first to launch equity mutual funds and children’s plans.

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As of March 31, 2024, UTI AMC manages a total asset under management (AUM) of Rs 18.48 lakh crore across various business segments like mutual funds, alternative investment funds, retirement business and portfolio management services. 

The company has a wide geographical presence with operations in 697 districts across India and international presence in over 35 countries. UTI AMC has a strong distribution network with 67,600 empanelled mutual fund distributors, national distributors and banks. 

UTI AMC has made significant investments in digital platforms, including a new website, mobile app and digital enablers for seamless transactions. They have witnessed a growing adoption of digital channels, with 49% of the total transactions being digital and a 9.24% year-on-year increase in digital purchase transactions as of March 31, 2024. 

UTI AMC’s past and its performance

UTI was established on 1st of February 1964, under the Unit Trust of India Act of 1963, with the primary objective of encouraging savings and investments among the general public. The first scheme launched by UTI was the Unit Scheme 1964, which was a pioneering effort in the Indian mutual fund industry. Initially, UTI focused on managing government securities and other low-risk investments, providing a safe and secure investment option for investors. 

In the 1980s, UTI expanded its operations by introducing new schemes, such as the Children Growth Fund Unit Scheme (1986) and the Senior Citizen Unit Plan (1993). The company also diversified its investments, venturing into equity markets and introducing the Master Equity Plan (1995) and the Money Market Mutual Fund scheme (1997). UTI’s Assets under management (AUM) grew significantly during this period, reaching Rs 29,835 crores by the end of January 2003. 

In February 2003, the Unit Trust of India Act of 2963 was repealed, and UTI was split into two entities: the Specified Undertaking of the Unit Trust of India  (SUUTI) and UTI Mutual Fund. SUUTI managed assets representing the US 64 scheme and certain other schemes, functioning under government rules and not under Mutual Fund Regulations. UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC was registered with SEBI and operated under Mutual Fund Regulations.  

Since the restructuring, UTI AMC has continued to grow and expand its operations, offering a wide range of mutual fund schemes and related services. The company has maintained a strong focus on investor education and awareness, promoting a culture of savings and investments among the general public. 

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UTI’s Financial performance

For FY 23-24 UTI AMC reported a consolidated revenue from operations of Rs 1,737  crore, representing a 37% year on year growth. The company’s consolidated profit after tax (PAT) stood at Rs 766 crore for FY 23-24, up by 75% year-on-year. The Board of Directors has proposed a final dividend of Rs 47 per equity share for this current year.  

UTI’s Future Expectations and Future Plans

The Union Trust of India expects to continue expanding its presence in Tier-2 and Tier-3 cities in India by opening more branches and leveraging digital infrastructure. This is being aimed at onboarding new investors and fostering long term relationships. UTI plans to deepen engagement with top distributors across the country, especially in smaller cities where they are seeing significant traction for their funds. 

On the international front, UTI expects margins and revenue to improve as they focus on launching new funds like the India Innovation Fund and Private Credit Real Estate Fund through their UTI International subsidiary. UTI plans to launch a Multi Cap Fund in FY 25 and is looking to innovate in the passively managed fund space as well as thematic funds. 

UTI is investing in and strengthening teams across its business lines like UTI International, UTI Alternative and UTI Retirement Solutions to grow the private pension business and launch new alternative investment funds. With the growth in AUM, specifically in equity and hybrid categories, UTI expects to witness a positive growth of more than 5% in their management fees in FY 25. 

Conclusion

UTI Asset Management Company (UTI AMC) has carved a unique space in the Indian financial landscape. Their pioneering role in introducing mutual funds and their long standing presence have established them as a trusted brand with a reputation for stability and reliability. This is reflected in their significant market share, which translates to the continued confidence investors placed in UTI AMC.

UTI AMC has delivered a strong financial performance in FY 24, with impressive growth in profits and revenues. The company has been able to leverage the buoyant capital markets and surging investor interest in mutual funds to drive robust AUM growth across its product categories like equity, hybrid and passive funds.

UTI AMC seems well positioned to sustain its growth momentum given the positive industry tailwinds of raising domestic investor participation, increasing financial literacy and under penetration in smaller cities/towns. With its sustainable business model, UTI AMC appears poised to continue its growth trajectory in the coming years. 

What would be your views about this article? Do let us know in the comments below. 

Written by Pavunkumar V M

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