This fund was launched in the year 1994 as a closed-end fund with a seven-year term. It sought long-term capital appreciation from equities with emphasis on the healthcare sector. Interestingly, GIC Growth Plus II offered to waive its management fee if it didn't achieve a 14% growth in a year. Its confident growth positioning helped it raise Rs 198 crore.
In 1998, the fund was converted into an open-end fund, three years ahead of its due redemption. However, the minute it acquired a new look, the fund lost over two-third of its total assets. Till 1998, it virtually went nowhere, much like the BSE Sensex. In March that year, its NAV was Rs 10.37. However, in July 1999, the fund went ballistic beating the Sensex by a huge margin. The reason: a concentrated portfolio of 10 stocks, accounting for 85% of total assets and rewarding big bets -- Hindalco, Mahanagar Telephone Nigam Ltd and McDowell & Co. Soon, the fund was riding the technology frenzy and increased its exposure to the sector, from 16.9% in March 2000 to 42.5% by September 2000. In its brief spurt, it paid two dividends in quick succession -- 30% in October 1999 and 15% in January 2000. But owing to its big stake through the tech wreck, the fund lost ground heavily. What's worse, stocks like Hughes Software and Cyberspace, turned out to be dud picks during that time.
Today, it is a much-leaner, and cleaner, portfolio of Rs 19 crore. Of course, Galaxy Entertainment -- which still accounts for 4.8% of the fund – sticks out like a sore thumb. Rest of the portfolio is well-diversified across sectors and almost fully invested in large-caps. Its top sector still is technology, but with a moderate 20% allocation.
In all, this small fund looks in the pink of health. However, it still lacks character and a coherent strategy despite having a long history. It's a tough call to rationalise investment in GIC Growth Plus II.
This article was originally published on August 14, 2002.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
