Despite sharp loss last year, Alliance '95 still offers long- term performance. Given its track record, however, it is an investment for investors with stomach for volatility
30-May-2001 •Research Desk
Despite sharp loss last year, this balanced fund from Alliance Capital still offers long- term performance. Wading through the thick and thin of the market, the equity-heavy and tech-concentrated Alliance '95 is now on its road to diversification!
With a charter of equity tilt which allows a 75% allocation to equities, Alliance '95 has held an average 68% of its investments in equity instruments. Pursuing a bottom up strategy, the fund picks companies that sustain growth through internal accruals even if it means paying a premium for them. Its preference for the growth theme of infotech, pharma and FMCG got rapidly polarised in favour of the ICE theme during the rally in 2000. While the fund manager is still bullish on the prospects of the technology sector, the fund has pared its holdings in the sector from an average 47% in 2000 to under 30% in March this year. The debt component, at an average 31%, comprises predominantly of AAA papers, with marginal exposure to AA instruments.
At a return since launch of 27.42% - the diligent stock selection has clearly worked. Further, its savvy trading profits that actually added to its sheen. While, the technology stocks took the fund to the stellar heights in early 2000, the tech carnage has hammered the NAV. While the fund was so far treading on a volatile trajectory, it has now chosen to broadbase its portfolio and its equity allocation has been pruned to 60% with a lower technology exposure.
Though its early days, the volatility associated with Alliance '95 could moderate if the fund manager sticks to diversification. Yet, considering the past track record and risk return trade off, Alliance '95 remains a suitable investment for long-term investors with stomach for volatility.