GIC Fortune 94, the first open-end equity fund of GIC Mutual raised a sizable money in its initial offer -- Rs 306.2 crore in December '94. GIC Fortune accounts for more than half of the GIC Mutual's assets under management.
In its over seven years tenure, the fund has been a dismal performer – losing nearly 50 per cent of its value. The fund's poor performance has been consistent – falling fast in a falling market without a rise in a rising market. Over most time periods, the fund has lagged behind the peers and benchmark. The fund remains a laggard with losing 23.5 per cent through 2001, trailing 65 per cent of its rivals.
The fund's beleaguered history started with its participation in PSU divestment. The fund got quality but illiquid PSU stocks -- Kudremukh Iron Ore Company, Indian Oil, Engineers India and GAIL. These stocks never caught the market fancy. The fund has been stuck with these till date. The fund's wildly diversified portfolio only added to woes reflecting lack of focus. Saddled with an illiquid portfolio, the fund was also unable to effectively participate in the 1999-2000 tech led boom. The fund had marginal technology positions -- HCL Infosystem and HCL Technologies, which accounted for 7 per cent of the net asset in January 2000. While Engineers India and Hindustan Petroleum constitute around 10-15 per cent of its portfolio.
Besides, the fund non-performance the faulty historic pricing policy proved disastrous, which it followed till June 1999. It provided the short-term investors to move in and out of the fund based on previous days NAV.
Today, the fund carries a large-cap growth portfolio with three key sectors -- Energy, Technology and Engineering accounting for 50 per cent of the portfolio. And the top holding Hindustan Petroleum accounts for 12.1 per cent.
The fund looks in good shape today. But the funds portfolio has always looked good to post poor fund performance. Looking at its over all dismal performance, investors will be better off elsewhere.