Date:27/05/2005 URL: http://www.thehindubusinessline.com/2005/05/27/stories/2005052702270100.htm

Back PruICICI's `SPIcE' doubles in a week

Virendra Verma

Mumbai , May 26

CAN an exchange traded fund (ETF) value double in a week's time? Looks impossible, but players in Indian stock market have done it.

The fund in which this has happened is Prudential ICICI mutual fund's "SPIcE" (Sensex Prudential ICICI Exchange Traded Fund), a passive investment tool tracking the BSE's main index Sensex.

An ETF is a hybrid product having features of both an open-ended mutual fund and an exchange-listed security. They can be bought and sold like any other equity share on stock exchange through a stockbroker.

There has been sudden spurt in the price of SPIcE on the BSE in the last one month with most of the gains seen in the last one week. The value of the ETF has increased 144.23 per cent in the last one week from Rs 82.16 to Thursday's closing price of Rs 200.66 on the BSE. In the last one month, the increase is 180 per from Rs 71.65 on April 26.

The unit has been hitting the upper circuit of 20 per cent in the last few days.

What is more interesting is that the total value of the units traded today (50,647 units) was Rs 94.70 lakh while the corpus of the fund was Rs 52 lakh at the end of April.

Under normal course the price of one SPIcE unit is equal to approximately 1/100th of Sensex. So if the today's closing value of Sensex is 6,670, then the market value of SPIce should be Rs 66.70 or slight variation from this. The NAV of SpicE on Wednesday was Rs 66.9295.

The sudden spurt in the value of the fund has not only surprised the market players, but to the mutual fund and the BSE.

On the sharp rise in the price of SPIcE, Prudential ICICI Mutual Fund said it has recently noticed the traded prices of SPICE ETF on BSE at values much higher than the NAV per unit/closing Sensex values.

"We wish to caution the investing public not to be misled or confuse the above listed unit with that of any other company.''

The fund has suspended issue of fresh units of SPIcE till further notice in the wake of spurt in price.

The BSE in a notice to its members has also cautioned them while dealing in SPIcE units.

The notice said it is apprehended that some of the market participants trading in "SPIcE" units have confused with similar sounding names of other companies.

The BSE said members are advised to make their clients aware about the features of SPIcE (exchange traded fund) before placing the orders.

In order to impart clarity and clearly distinguish from other scrip containing the word Spice, the BSE has changed the identity of Spice units from "SPICE" to "SPICE-ETF".