This is a long-run outperformer. Its 5-year annualised return of 23 per cent (February 28, 2010), puts it ahead most of its peers and the benchmark. During the 11 years of its existence, it's only natural that in a few years it would underperform the category average and in some deliver outstanding performances. But by and large, it beats the category average by a small margin.
Last year, the fund could not manage an outperformance and delivered 77 per cent (category average: 80%, Sensex: 81%). “The fund is managed as a predominantly large cap fund. Last year, large caps underperformed mid- and small-caps. However, the year-to-date performance is higher than the Sensex,” says Venugopal. Though Venugopal tilts towards large caps, historically that has not been the case. In fact, in 2003 and 2004, it resembled a mid-cap offering. In 2009, the fund began to bet on smaller fare and exposure to large caps is now at around half the portfolio.
Venugopal moves between sectors fluidly. Between December 2008 and May 2009, exposure to Financial Services dropped from 19 per cent to 6.78 per cent to rise again to 15 per cent. The exposure dropped early 2009 when the sector took a beating. Once the market picked up, Venugopal added HDFC, India Infoline and ICICI Bank to the portfolio. “On a fundamental basis we are positive on the Financial space given the demographic profile and savings rate in the country and under-penetration across the sector. The sector offers a number of quality stocks where depending on valuations one could buy or sell at any given time. I therefore don't see any trend or strategy behind fluctuation in our exposure to the financial sector during the last year if any,” he says. Simultaneously, exposure to FMCG reduced dramatically when the market rallied only to begin picking up in the last few months. “Given the consumption-led growth seen and expected in the country, we have been positive on the FMCG sector. However one needs to be stock specific while investing,” he adds.
Venugopal is a great believer in diversification. No stock, barring RIL and ONGC, grabs more than 7 per cent of the portfolio. From a portfolio of less than 30 stocks, he holds around 48 stocks, peaking at 60 in April 2005.