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A Fallen Star

Constant reshuffling of the portfolio and inconsistent strategy has led the investors no where, making Taurus Starshare an unattractive long-term investment. Its long history is no excuse.

The Taurus family's first born, Taurus Starshare -- after making a good start -- is struggling to meet ends today. Floated as a closed-end growth fund in January 1994, it turned open-ended in September 1999, managing a neat Rs 200 crore in its kitty. Launched around the IPO boom in 1994, the fund built a wildly diversified portfolio of nearly 200 stocks. Soon after, the IPO bubble burst, taking the fund along with it. And continued for the next four years. Large portfolio of illiquid stocks acquired during the IPO phase played havoc with the fortunes of the fund.

As a result, in 1998, the fund embarked on a portfolio revamp. By early 1999, the portfolio was still spread across 125 stocks, with 30 stocks accounting for 90% of its net asset. In mid-1999, when the tech boom was on, the fund capitalised on it tech-heavy portfolio -- over a third of its investments was parked in tech sector. The result: Tauru Starshare was up a whopping 135%. In spite of the NAV reaching a peak of Rs 15 during that time, the fund suddenly crashed in 2000. Not unusual, during the tech crash, many equity funds were overweight in technology.

The reason for this fund to hit a low was its speculative technology positions such as HFCL, which at its peak accounted for 36% of the total assets. The tech wreck lead to massive value erosion. In a bid to make up for lost ground, the fund has reduced its tech exposure to a mere 6%. The portfolio is still well-diversified, with small-caps accounting for a sizeable share, adding significantly to its volatility and liquidity concerns. Besides, the fund totally missed the PSU rally. As a result, this 8-year-old fund is languishing at the bottom, with net assets of Rs 44 crore and NAV at Rs 5.86.

In all, Taurus Starshare is a risky fund with a potential to deliver high returns. But in its long history it has only courted risk and hefty losses.