It claims that it follows a conservative way of investing in equity markets with a cushion of fixed income. In actual, its aggressive reallocation makes investors perceive it to be more of an equity fund rather than a balanced fund. Although its mandate talks of periodic re-allocation between stocks and bonds, the latter's allocation hovers in the 58% and 75% range. So, what if within a year of its launch, the stock markets went nowhere and Alliance 95's equity investments took a hit. But then its substantial bond holding acted as a buffer against possible sharp erosions.
After an initial lean phase came the fund's days of glory, when its cherry-picked stocks went on to deliver stupendous performance for three consecutive years. However, in the recent years, its performance has been anything but inspiring. That's because this 5-star fund's top picks, Reliance, Infosys, Satyam did not sere much appreciation in their value as was the case earlier although they continued be on top during 2001. Hence, its buy-and-hold strategy proved to be a misfit, although this very strategy helped this fund be a consistent 5-star performer.
Having a knack for spotting new trends ahead of others explains how Alliance 95 has never had to struggle to outperform the broad indices consistently. No surprise then that Infosys and Satyam has been its top picks since 1996-97. Picking up just about anyone is not Alliance 95's style, this fund tends to take a long-term view before buying a stock.
With BPO, the new buzzword, second-tier IT companies are proving to be a goldmine now, justifying its faith in Digital Globalsoft. Gradually, the fund is exiting large-caps by opting for mid-caps -- by profit booking whenever the occasion arises. That Technology apart, the fund's reservoir also comprises energy and auto stocks, which has had wondrous effect on its recent performance.
As for the fund's bond allocation, it continues to provide adequate cushion. Its debt portfolio is well spread out and comprises instruments of varying credit quality.
All in all, this fund will curry favour with growth investors, looking for stability as well.