Painful as its slump was in 2011, we still think it remains a more-than-respectable choice. With an equity allocation capped at 75 per cent, the fund manager never hesitated to touch this limit. Last year the equity exposure of the fund averaged around 73 per cent. Nevertheless, we don’t believe this was the sole cause of its poor performance. In fact, the allocation was in line with the category average. Where the fund did get hit was in its exposure to smaller fare.

In 2011, the fund’s equity exposure to large caps was around 54 per cent (category average: 62%). While BSE Mid Cap and BSE Small Cap shed 34.19 and 42.61 per cent, respectively, the Sensex limited its fall to 24.64 per cent. Despite getting hit, the fund has not shed its mid- and small-cap bias.

The only comfort is that the number of stocks hovers above 30 while prior to 2009 they ranged between 15 and 20. It is this equity limit combined with the decision to invest in mid and small caps and not get too diverse in terms of number of stocks that gives this fund a risky bent.

The equity portfolio of the fund is managed quite actively. It is not rare to see the fund manager enter a stock only to completely exit it within the next few months. Even with stocks that are held for a long period in the portfolio, intermittent investments and exits are evident. This is all the more visible in large caps where liquidity is not a problem. This gets reflected in the dynamic sector allocations too.

It is only from March 2010 that the fixed income portfolio sports debt instruments with a strong preference towards non-convertible debentures (NCDs) and Certificates of Deposit (CDs). Prior to that, cash and cash equivalents were the sole components. This fund won’t take aggressive maturity bets and has, by and large, maintained a low maturity profile which has never exceeded 12 months.

In the first two years of its existence, the fund maintained a very low equity exposure resulting in a classification in the ‘Hybrid: Debt oriented’ category. From 2008 onwards it got reclassified into the current category.

While Omprakash Kuckian did a good job over the past few years, one has to see if his replacement Sanjay Parekh follows suit.