With an uninterrupted dividend, three bonus and two rights issue, Mastershare has posted a return of 17.36 percent in its close to 15-year tenure. Currently the fund trades at a 36.75 percent discount to its NAV. The fund's assets base of Rs 1179 crore, being the largest amongst its other close-ended counterparts, is spread across 194 stocks with 60 percent concentration in blue-chip FMCG, technology and diversified stocks.
By its very nature a closed end fund is rarely subject to huge inflows or outflows, which gives a leeway to the manager in passive fund management. Hence, irrespective of the market flavor, Mastershare was consistent concentrated in - FMCG, technology and diversified sectors only to miss out the gains in the times of market rally. For instance, during the FMCG, pharma and technology led rally in 1999, the fund gained a handsome 52 percent but trailed the benchmark BSE Sensex which returned a whooping 63.8 percent.
Even in the tech rally of late 1999 and early 2000, the fund gained a mere 0.52 percent against the Sensex's gain of 6 percent for the six months ended 31 March 2000. But a decent 28 percent exposure throughout 2000 helped the fund survive the ensuing tech carnage. With a 22 percent shave off, the fund closely tracked the benchmark BSE Index's loss of 21 percent.
However in the current year, the fund has shed more than its losses during the whole of 2000. The portfolio has turned defensive with increasing concentration in FMCG, diversified and energy stocks and a pruned down tech allocation.
The uninspiring recent performance doesn't make Mastershare a compelling sell as it trades at a steep discount. Rather it qualifies as a good periodic buy for its discount, an average performance and its defensive portfolio, which might turnaround by its redemption in October 2003. And in case it doesn't, your downside will be guarded even if the market falls by another 36%.