The fund has beaten the category average every single year, except in three instances. In 1999, its high exposure to fast moving consumer goods (FMCG) and pharma stocks went against it in the tech-dominated rally. In 2000, it went overweight on technology and got punished for it. Its underperformance in 2007 was due to a combination of sector moves.
But despite these occasional setbacks, we continue to think highly of this offering. Its success in standing upright in a bear market, without resorting to debt or high cash levels, is a testimony to the fund manager's proficiency and skills. It was his tendency to maintain a large-cap bias and exposure to defensive sectors like consumer non-durables and healthcare that saw the fund through bad times.
Not only this, being almost fully invested helped the fund outperform the category by a wide margin of around 12 per cent as it turned in 83.20 per cent during the recent rally (March 9, 2009 to June 2009). The fund, gained due to around one-fourth of its portfolio being allocated to banking stocks -- BSE Bankex was among the best performing indices in this rally.
Ever since Prashant Jain took over in early 2002, there has been a discernible change in the portfolio. The fund has sported a predominantly large-cap portfolio consisting of blue chip stocks (though some of his mid-cap picks turned out to be multi-baggers). Recently, there has been a more generous accommodation to mid-caps, which have been cornering around 35 per cent of the portfolio. Its top holdings, which at one time had brazenly high allocations, are now at a more subdued level with around 60 stocks in its kitty. Though the fund stays well diversified on the sector level, the fund manager has largely parked half the assets in three sectors.
Those who share the fund manager's conservative views and long-term approach have good reason to stay the course.