Accomplishment over different market cycles is this fund's strong point
21-Feb-2011 •Research Desk
This one made its mark in a relatively short period of time. Launched in 2007, it bagged a 5-star rating in the very first month of being rated.
However, upfront there is a question to be addressed: What sets this fund apart from Fidelity Equity, another fund in the category from the Fidelity stable also managed by Kothari? Fidelity India Growth Fund is more biased towards growth stocks and the fund manager is more willing to take concentrated bets here. To add to it, it also has the flexibility to invest in international markets.
True to Kothari’s style, this fund adopts a buy-and-hold strategy and of the total 48 stocks currently in the portfolio, 34 have been held since inception. Over 80 per cent of the portfolio is currently in large-cap stocks. Like Fidelity Equity, Banking has been the preferred sector with an average exposure of 25 per cent since launch.
In 2008, the fund utilised the attractive valuation opportunity in the bear market by investing in under-valued stocks. Its cash position did go above 10 per cent for three months between May and July in 2008. By the time the rally began in 2009, the fund was fully invested which gave it a headstart. That year, it delivered 91 per cent and was the best performing fund in the category in 2010.
During the last two years, Banking, Pharma and IT were the biggest contributors to the fund’s gains. “The out performance is the outcome of following Fidelity’s investment philosophy of bottom-up stock picking, to deliver superior risk adjusted returns to our investors,” says Kothari. But in the same period Telecom and Steel negatively impacted the overall gain.
Its performance in difference market phases is impressive. The fund takes concentrated bets when the fund manager has a high degree of conviction (RIL, ICICI Bank, Infosys Technologies). Active cash calls at certain times, with the focus on fundamentals and ability to identify stocks and managements which can execute well at the right value, has made it a star performer.