Despite a portfolio of around 50 stocks, a large-cap tilt and exposure to derivatives, debt and cash, it's not a fund for the cautious.
True to its calling, it scouts for opportunities and doesn't hesitate in taking concentrated sector and stock bets. This leads to extreme returns. In the bull phase (June 15, 2006 to January 8, 2008), it delivered 91.26 per cent against the 81.29 per cent average of other opportunity funds. Unsurprisingly, it shed higher in the bear hug of 2008.
Its charm lies in its capability of identifying sector trends well ahead of time. In 2005, it rode the FMCG wave and the move paid off. In the first quarter of 2006 it focused on metals. In 2007, its exposure to construction and metals resulted in a superb performance. In 2008, it was overweight on the least-hit FMCG sector which helped it get away with an average fall. More recently, it played its cards well in the auto boom. The category average to the auto sector was around 2.44 per cent while this fund's exposure stood at 4.58 per cent in the first quarter of 2009. During this period, the BSE Auto index returned the highest (25%) amongst all other indices.
The fund has increased its allocation to large caps from January 2008 (58%) to March 2009 (71%) while the equity allocation has averaged at around 82 per cent in the past six months. Yet the broad diversification across sectors has been maintained.
The fund manager actively churns the portfolio and books profits regularly so it's not surprising to see 78 stocks make an appearance for just five months or less. For instance, in November 2004, from having no exposure to services, he took a 4 per cent exposure with just IBP and Great Eastern Shipping Company only to dump them the very next month. In June 2005, he took an exposure to Grasim Industries (4%) and the IPO of Assam Company (5%). By the next month, both were out. This year, he made a quick buck in Union Bank of India, Shree Renuka Sugars and Balrampur Chini Mills.
The quarterly returns show that it's not a consistent out performer. There are times when it has been on a roll as well as occasions where it has failed to deliver average returns. But this behaviour comes with the turf and those with an aggressive bent will feel at home here.