Launched around the peak of the IPO boom, Prima Plus started as a stock collector. By March 1996, Prima Plus' portfolio was totally de-focused with nearly 200 stocks in its kitty, including many small-cap and illiquid issues. Despite relentless cleaning of the portfolio, the fund took nearly four years to consolidate. Since 1998, the fund has been focusing on large and mid-caps and to a more manageable number of issues -- 45-50 in the last 2 years.
A sharpened portfolio focus ahead of the market rally, saw the fund turn in stupendous returns in 1998 and 1999. It grew at a fast pace to make up for initial losses with big bets in technology, some of which – such as Satyam, Hughes, Zee and Mastek – went awry. Losing 30% in 2000 has made it conservative, with high concentration on large-caps. In 2001, it fared much better losing only 5.44% against the category's average decline of 19.47%.
This year, the fund from the word go has been almost fully invested. Today, it favours growth sectors, with technology and healthcare accounting for 35-40%, while maintaining its old positions in Infosys, HCL Technologies, Cipla, Ranbaxy and Pfizer. It has renewed its focus on FMCG stocks, which accounts for 12% now, from almost nothing in February 2002. This cautious approach has lead to a modest year-to-date return of 13.92% as on August 21, 2002, with greater stability. Small wonder, it is a 5-star.
The fund has a high turnover ratio of 183% in the last eight months reflecting frequent portfolio churning. But the fund manager attributes it to some value-based trading opportunity it cashed on, few corporate actions also added to its turnover like the merger of ICICI and ICICI Bank and Hindalco and Indo-Gulf. In the past few years, the fund has maintained a core portfolio and reduced exposure to auto, construction and basic engineering sectors. It has been able to capitalise on the PSU rally, by increasing its exposure to HPCL and BPCL. Also, the fund bought into Shipping Corporation and Container Corporation for a month, making smart gains of 75% and over 30%, respectively.
In all, the fund is an attractive buy for its quality orientation, a clear portfolio focus and stability of return.