Canglobal, formerly Candouble, was originally a balanced fund. Launched in February 1990, the scheme promised, at redemption after 5 years, twice the amount invested. However, with the markets in an unrestrained fury marked by the rally in 1992 and 1994, the fund in its five year tenure just before maturity, generated a return of 16.6% per annum much higher than the assured return of 12.50% per annum. Hence, investors opting out were offered a redemption price of Rs 21.56. and 90 per cent of the fund, amounting to Rs 230 crores, got redeemed.
At the end of five years, the fund got rolled-over and converted into an all equity growth fund. However, post roll-over the fund became too small to be meaningfully diversified. Besides, the twin factors of sustained redemption pressure and the onslaught of the prolonged bearish markets till 1998, took a toll on the fund and it lagged the broad markets with a wide margin. Until 1998, the returns generated by the fund had trickled down to a mere 5.8% per annum.
However, the rising markets of 1999 coupled with a realigned portfolio gave the fund the much needed momentum. The fund, so far into cyclical stocks, came to have a 40% allocation to the growth sectors of Pharma, FMCG and Infotech by the third quarter of 1999. However, with infotech sector ruling the roost in the bourses, the fund increased its allocation to the sector alone to half of the portfolio during the time when the rally peaked in early March. Besides, the fund freshly into media stocks during the peak levels of February 2000.
It was not a surprise when the fund lost heavily during the ensuing meltdown. So much more because of its mid cap stocks averaging to a very high 45% of the portfolio. Year-to-date, the fund ranks among the lowest in the Value Research's category of diversified equity funds with a loss of 41%. Currently, with 70% invested in equities, the fund has 40% allocation to telecom & infotech, 13% to pharma and 6% to consumer goods. The top 10 stocks of the fund account for around half the portfolio.
Though, the fund has for some years now been actively managing its portfolio, it does not seem to have been very lucky with its stock picks. Besides, the fund continues to have a higher exposure to mid-cap stocks, which will only add to the volatility. Since launch return of the fund at 4.75% is far lower than even a short-term debt fund.
The fund has till date paid two dividends- 12.5% in 1996 and 20% in 1999. The fund also issued bonus units in the ratio of 1:1 in February this year.