In its short history, this one has made its mark. Though its annual and trailing returns are amazing, the fund started off on a lousy note (last two quarters of 2005). It managed to impress in 2006 and was turning out to be pretty average in 2007, till Omprakash took over in November 2007 and wasted no time in changing the complexion of the portfolio. Exposure to Construction shot up to 28 per cent with almost 21 per cent cornered by Pratibha Industries and Madhucon Projects. Exposure to Engineering was yanked up (18.50%) while Financial Services lost its prime slot (dropped to 6.69%) and Auto was dumped. That quarter (December 2007), he delivered 54.66 per cent (category average: 25.70%).
When the market collapsed in 2008, thankfully the fund did not plummet abysmally. But even its high cash allocations could not cushion the fall which hovered around the category average.
The fund manager attempts to capitalise on valuation differentials between mid- and large-cap stocks which at times can result in aggressive churning. “If the market gets choppy and I see a lot of opportunity, then I churn my portfolio, but not needlessly,” says Omprakash. The direct fallout of such a strategy is that the market cap composition keeps changing. This fund started off as a large cap fund but resembled a pure mid cap offering by the end of 2007. During the last two months that year, exposure to large caps stood at a meagre 20 per cent. Since January 2009, it took on a distinct large cap tilt which it maintains till date. Had Omprakash opted for a greater mid cap exposure, he might have delivered even higher than 102 per cent (2009). “There was more comfort in buying large caps. But we added mid caps wherever we could. The issue is that you need to get mid caps at the requisite quantity and at the right price, which is a problem when volumes are poor,” he says. Right now, he is adopting a more cautious approach. “We have a mix of large and mid caps because I do not think the market is cheap and I foresee it to be sluggish in the near future,” he says. “I am adopting a wait-and-watch strategy to see how interest rates pan out and how inflation is dealt with.”
As assets have risen, so have the number of stocks. And while you may see strong sector bets, he plays it safe with individual stocks: the high allocation to Pratibha Industries was more the exception than the norm.