After a fabulous run from 2005 to 2007, its thrashing in 2008 was unexpected but not a problem. It bounced back the very next year and has maintained a top quartile performance but has toned down in the transition.
The fund has evolved over the years to emerge as a strong contender. Its earlier performance was marked by an aggressive allocation to equity, often touching its limit of 25 per cent. This was to just a few stocks, which sometimes dipped to less than 10 in number. To add to it was the bias towards mid and small caps. The same aggressive slant was apparent in debt with the average maturity going as high as 10.29 years (July 2005).
The year 2008 proved to be a turning point in the fund’s history. Ritesh Jain came in under the new management (Robeco took a stake in the fund house) and took charge of the debt funds (and later became the CIO). Jain’s basic aim was to restrain the aggression on the portfolio. “We focus more on bluechips with marginal allocation to mid caps,” he says. Jain ensures that that equity exposure is no longer focused on a few stocks and now touches 40. Allocation to a single stock rarely exceeds 1 per cent while allocation to large caps touched a high of 75 per cent (March 2011). The equity allocation ranges between 13 and 24 per cent.
On the debt side, Jain tends to refrain from taking active maturity bets. Over the past two years there has been a slight increase in the maturity profile but it’s still on the lower side as compared to its peers. “The fixed income allocation purely follows an accrual strategy which focuses on investing in high-quality debt with a ‘hold-till-maturity’ philosophy,” he says.
While it has toned down, its leeway to go up to 25 per cent in equity does target the slightly adventurous investor. Ironically, as assets of the fund have risen, so has the expense ratio.