Notwithstanding the bad weather for technology stocks, Prudential ICICI Technology is finally coming out of the woods. After residing in the middle of its category, this fund is now performing well. What lies behind these performance numbers is a transition from momentum stocks to large-caps and stable names. Launched during the tech frenzy of early 2000, this fund managed to mobilise Rs 500 crore. The corpus was widely spread across stocks like Aftek Infosys, GTL and DSQ Software, along with big names like Infosys and Satyam. But as the market tanked, the fund's fortunes tumbled and it lost half of its value by the end of 2000.
Since then, the fund manager has gradually reduced exposure to stocks, which caused the maximum destruction. From 2001 onwards, large-cap names like Infosys, Satyam, HCL Technologies and Digital Globalsoft have formed the core of the fund's portfolio. Besides, as the tech sector remained in the dumps for most of 2001, this fund gravitated into other sectors like pharma. In the post-9/11 rally, this fund underperformed its peers as a fifth of its portfolio was in cash. Early profit booking in stocks like Infosys was also responsible for this performance. On the whole it was a bad year for the fund and it ended in the bottom half of the category.
In 2002 Prudential ICICI Technology Fund once again started looking at mid-cap stocks in the sector but not at the expense of its large-cap holdings. While the fund was somewhat late compared to its peers in acquiring stocks like Mphasis BFL and E-Serve International, it could make up for the lost gains by being an early entrant in stocks like Bharat Electronics. Active cash management also helped Prudential ICICI enter the first quartile of its category in calendar 2002.
The winning streak has continued in this year's rally. The increased exposure to media stocks as well as top-performing pharma stocks like Divi's Labs has also contributed to its returns. Prudential ICICI Technology Fund has established a place among the better performers in the category. Investors looking for technology exposure can examine this fund.
This article was originally published on September 22, 2003.
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.
