This fund throws no surprises and plays safe. The performance rarely strays from that of the Sensex, with sound downside protection that pays off in the long-run.
This fund has always had a large-cap tilt with over 85 per cent allocation to large-cap stocks considering 80-90 per cent allotment to the Sensex companies, though not necessarily in proportion to the Sensex weightage. For instance, currently, the fund is conservative; being overweight on FMCG, Chemicals and Engineering sectors compared with the Sensex. However, it is underweight in Healthcare and Financial sectors, amongst others.
A buy and hold strategy is followed with little room left after allocation to the Sensex companies. And, since inception, around 37 non-Sensex stocks have been part of its portfolio. The fund relies heavily on select stock picks to generate returns. As on March 2012, 14.88 per cent of the net assets were invested in non-Sensex stocks such as India Glycols, Solar Industries and Satluj Jan Vidyut Nigam. However, the fund maintains not more than 15 per cent allocation to any individual stock.
This fund does what it is meant to óbeat the benchmark Sensex. It has done well since its launch, posting superior returns compared to the category average barring 2007. It has been part of top 2 quartiles in 9 out of 10 years of its existence but managed to be in the top quartile on only two occasions. The fund has fared better than the Sensex in both the short- and long-term. The three-year annualised return is 10.35 per cent compared with 6.34 per cent for the Sensex. Similarly, the five-year annualised return of 6.80 per cent is much higher than the 3.53 per cent posted by Sensex. In years when the markets have crashed, this fund has arrested the fall better than the Sensex; in 2008 it lost 47.08 per cent compared with the 52.44 per cent loss posted by Sensex. A small asset base of Rs 83.78 crore as on June 30, 2012 helps the fund manager manage the portfolio efficiently, which has also been a reason for the fundís superior returns.
An excellent pick for risk averse investors looking for returns stability. The portfolio does not deviate much from the Sensex, yet it manages to marginally do better than the Sensex.