Unit Scheme '95 can be the perfect choice for defence-minded investors. Though the fund lacks the firepower of some of its peers, it has proved to be a safe heaven for its investors in the long run, delivering reasonable returns from time to time. The fund's track record of protecting returns make it all the more attractive for conservative investors.
Even though the fund has lagged behind most of its peers in the last one year (as on June 18, 2004), its 2-year and 3-year returns have closely followed the category average, while the 5-year returns have been excellent — it has bettered the category average and is among the top three funds.
The fund's distinguishing feature had been its ability to weather the storm and deliver whenever the markets have gone haywire. This can be gauged from the fact that the fund returned a whopping 26 per cent compared to a category average of 13 per cent negative return in the year 2000. The same year, it topped its peers primarily because it timed the equity rally to perfection — the funds had trebled its equity exposure to mid-caps from 11.5 per cent as on December 31, 1999, to 35 per cent as on December 31, 2000.
Similarly in 2001, the fund's returns though negative, closely followed the category average. Such a performance can be contributed to the fund's limited exposure to top-rung tech companies. While the fund protected it's downside, the gains as well as risks were also trimmed down to that extent.
The fund survived 2000-01 technology onslaught by shifting predominantly into debt, thereby escaping the bloodbath. But gradually, as the markets moved into the stabilisation mode, it became an equity-inclined fund.
This fund's resilience to hold onto quality mid-caps has been the reason for its pillar strength in the sense that it has persisted with its old mid-cap holdings like Wyeth Labs and Pfizer, reaping good dividends for the fund. Of late, the fund has shifted its focus from large-caps to mid-caps. This has been a major shift keeping in view its conservative investment approach.
On the debt front, corporate bonds have been the flavour for this fund with a judicious mixture of AA and AAA bonds. Government securities have rarely grabbed a 10 per cent share even in the rising market of 2003. The fund improved its credit quality with corporate bonds holding the major part of debt portfolio. While patient investors can have a look at this fund, aggressive sorts may not find it much attractive.
This article was originally published on June 22, 2004.
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