FT India MIP is one of the best funds in its category - efficient at managing both rising and falling markets. Its risk-adjusted returns over an 18-month period is the highest among its peers, indicating that the fund handsomely compensates its investors for the risk that it exposes them to. For instance, take a look at its performance scorecard. Its three-year returns are the second best in its category, one-year returns are the best, while its returns since launch vis-à-vis its peers (between Nov '00 to August '04) is again the best in the category.
Its year-to-date return (till August '04) is the second-best in its category. The six-month returns are the 4th best in a 33-fund category. Three-month performance rank is 4th out of 39 contenders and its last month returns are the second-best in a 41-fund category. All this at a time when both debt and equity markets have been characterised by unprecedented volatility.
The fund has always maintained an aggressive posture. On the debt side, it has taken higher interest rate calls. Between Jan '01 and March '04, when yields were sliding, its average maturity on an average was 3.97 years, which helped it deliver the second-best returns in its category. However, the current debt market volatility has forced it to reduce the average maturity of debt holdings to 1.57 years from 3.7 years in May '04, though it is still above the category average of 1.50 years.
One area of concern that it has managed to address effectively over the last year is of the credit quality of the portfolio. In July '03, the fund had 27.3 per cent of its portfolio in lower than AAA or equivalent rated bonds. But since Sep '03 it has made a conscious attempt to improve the quality of its portfolio and its exposure to lower than AAA-rated securities over the last one year has fallen to 10.5 per cent on an average.
It has leveraged its equity portfolio to generate excellent results. Between April '03 and Jan '04, an average equity allocation of 16.07 per cent helped the fund generate the second-best performance with returns of 17.6 per cent. One commendable feature of its equity portfolio has been the large-cap concentration; it has always maintained a large-cap heavy portfolio. Currently, 74.6 per cent of its holdings is invested in large-cap stocks and only 23.85 per cent in mid-caps.
This fund's glittering track record makes it our recommended pick. There is a caveat though, its aggressive posturing makes its returns volatile. However, it more than compensates for this risk through extraordinary returns made possible through active fund management.
This article was originally published on October 05, 2004.
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