Prima Plus has evolved from a brash and adventurous offering to a well diversified, large-cap oriented player with low volatility and decent returns. In its heady days, the portfolio could hold as few as 19 stocks, but this could just as easily morph into more than 100.
The bursting of the dotcom bubble in 2000 was the turning point for the fund. The fund manager now mainly sticks to large-caps. Though his positions in individual stocks sometimes touch almost 10 per cent, it is not much of a risk since it is a high quality, liquid portfolio. The small, and frequently churned, exposure to lower cap stocks, which on an average is 28 per cent, adds alpha to the fund.
Despite a leeway to invest up to 40 per cent in debt and 20 per cent in cash, the fund's equity allocation averaged 94 per cent in 2008. And it still managed not to fall as hard as the category average. The allocation to defensive sector (FMCG or fast moving consumer goods) helped the fund contain the downside.
But in the recent rally (March 9, 2009 to June 30, 2009), exposure to FMCG sector led the fund to underperform its category as it delivered 63.40 per cent against its category's 71 per cent.
The fund manager does not buy into fads easily and follows his own convictions -- the low exposure to metals and energy in 2007 and the higher-than-average exposure to financial services in 2007 and 2008, for instance. In 2008, there was a substantial increase in exposure to FMCG and telecom, while the exposure to computer software fluctuated from 3 per cent (November 2007) to 14.56 per cent (May 2008) and down to 4.95 per cent (March 2009).
Granted, this fund will neither deliver flashy returns, nor will you regret having invested in it.