This fund may not be at the top right now, but given its compelling long-term record, this is something that ought to be overlooked. The fund's total return over the five-year term has been 39 per cent a year-a superlative performance by any standards. Largely maintaining a large-cap bias, this fund has ridden the bull market with same comfort as it has during the bear phases, thus making it a relatively low volatile tax-planning fund.
The fund believes in businesses with ability to generate returns over the long term. So, it has largely followed a buy and hold strategy. For instance, its top holdings like HPCL, SBI and Infy have remained since 2000. Even when Infy tumbled in April 2003, it stuck to it and reduced the exposure only when Infy's price climbed to pre-April level.
From the start, technology has found a prominent place in the fund's portfolio. Launched before the tech-led bull-run, it fully capitalised on the boom on the back of a tech heavy portfolio (70 per cent in January 2000). This led to huge inflows into the fund-its unit capital swell 10 times in 2000. The fund also deployed new money into old economy stocks, which reduced the impact when tech collapsed. Consequently, it was among the three funds that ended 2000 on positive note.
In the next three years, tech has moved in and out of favour and the portfolio has attained diversity. This along with higher exposure in defensive like FMCG and pharma saved the fund from taking a hit when tech collapsed in early 2001. Moreover, post-9/11, the fund's higher exposure to tech and PSU stocks helped it recover most of early losses and it was at the top. But when large-caps lost momentum in 2002, the fund's returns landed in the middle of the performance chart. However, it managed to outperform its benchmark S&P CNX 500, because of its lower concentration in FMCG-the worst performing sector of 2002. The fund's higher exposure to tech helped it post decent return when tech revived at 2002-end.
In 2003, though it gained 101 per cent, it under-performed the category despite being in line with its benchmark. The fund has done every thing right in 2003-kept higher allocation to performing sectors like bank, energy and healthcare. But its low exposure to mid-caps and love for tech stocks were responsible for its average performance last year. It's a fund that is meant for keeps for its diversity and consistent investing style.
This article was originally published on March 02, 2004.
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