With a performance graph closely mirroring that of the BSE IT Index, Alliance New Millennium bears testimony to the dizzying heights and scary depths that technology stocks have witnessed in recent times. However, unlike its hey days, the fund is now a believer in the sectors' mid-cap companies. The fund's faith in large-caps, particularly Infosys and NIIT helped it stem losses during the meltdown of 2000. Similarly, switching tracks to mid-caps helped the fund limit its losses in early 2002. However, off late its performance has taken some hit. The fund's one-year returns through January 8, 2003 stand at 9.54 per cent against the category's one per cent gain. Some of its early stock discoveries like Digital Globalsoft, and the recent pick, Bharti Tele-ventures, are facing rough weather, contributing to the fund's slowdown.
Don't lose heart yet, there is a reason to keep the faith. Fund manager Samir Arora's claims of having picked potential leaders ahead of others and holding on to them for a long period, have paid off in spades. Case in point: Balaji Telefilms, as on October 31, 2002, was up a whopping 135 per cent since it first entered (end-July 2001) the fund's portfolio. More than this, the fund turned in a stupendous performance post-9/11 when IT stocks rallied heavily. Heavy concentrations in stocks like Infosys, Satyam, Wipro and Balaji Telefilms contributed to this spectacular run.
Launched at the peak of the technology rally, the fund did not shun speculative stocks like Himachal Futuristic (HFCL) and Global Telesystems Ltd (GTL). These stocks were acquired around their peak and figured among the top picks for a long time. Both these stocks were exited from the portfolio when they had fallen significantly in value. In 2001, the fund tried to take shelter in offbeat holdings like Reliance, which figured at the top for most part of the year. Subsequently, the fund gave up this strategy in February 2002 and went back to its core competence — IT.
At the end of the day, if there is an opportunity within the technology sector this fund manager will surely find it. In pursuit of these opportunities the fund will ride the highs and the lows with equal vigour.