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Moving Towards Consistency


Taurus Mutual Fund seems to be undergoing a transformation of sorts. Historically, this fund house has a track record of erratic performances where its schemes are concerned. While it would be wrong to classify the schemes as underperformers, consistency has certainly not been their virtue. They can deliver amazing results in environments hospitable to their aggressive style. But when its bold approach falls from favour, look out below!

Now that seems to be changing, for the better.

The year 2007 was an exceptional year of outperformance for the equity schemes. They found themselves amongst the top rank holders in their respective categories. Though Taurus Bonanza was an exception, it did manage to beat its category. But in the subsequent downturn the schemes were thrashed badly. Most of them found a places in the bottom quartile of their respective categories.

Last year, while they were not chart toppers, again the exception being the infrastructure fund, they appear to now display some amount of stability that was not evident earlier.

Over the past year, the fund house has put in place numerous risk processes and practices which have dealt with the fund's earlier bold and brazen style. The reason for the volatility was very concentrated holdings where around 6 to 7 stocks would account for more than half of the portfolio. They seem to have addressed the ghosts of the past and the results are now showing. The fund house is making a deliberate attempt to evolve as a more disciplined player.

Individual stock limits are restricted to 6 per cent (the regulatory limit is 10% of the portfolio's allocation). The maximum investment in a stock in a single day is 4 per cent of the assets under management (AUM) or 2 per cent of the assets of a single scheme. The highest cash exposure in a scheme is limited to 15 per cent. To go higher, permission from the CEO is mandatory. To ensure that the portfolio is no longer dominated by illiquid stocks, 75 per cent of the portfolio should be in a position to be liquidated in 10 trading sessions.

The fund house now monitors the respective benchmarks more closely. The portfolio stocks and sector weights have limits (upper and lower) which are linked to benchmark weights. Limits are also set in terms of market cap exposure.

Waqar Naqvi joined the fund house in 2008 with the aim of placing it amongst the top 10 players, in terms of (AUM) by 2013. The AUM has moved from Rs 408.15 crore (September 2008) to Rs 798.89 crore (August 2009) and now is at Rs 2,235 crore (July 2010). The performance of the schemes will go a long way in bringing more investors on board.