Starting as an ultra-conservative player, the fund has now started adopting aggressive postures. For example, from a large-caps dominated equity portfolio till July 2003, the fund has transformed itself into a mid- and small-cap admirer. In 2000, the fund's equity portfolio had an average 26 per cent exposure to mid- and small-caps together, which has jumped substantially to 60 per cent as on November 30, 2004, against the category average of 49 per cent. The fund has largely maintained a 60:30 equity and debt ratio.
However, this shift has not had any adverse effect on the fund. It continues to deliver reasonable return with fair amount of safety. Like most part of its investing life, the fund has managed to match the year-to-date till December 17 category average returns in 2004 as well.
Even as the fund has not been able to match the returns delivered by some of its aggressive peers in the last year as on December 16, 2004, its 3-year returns have closely followed the category average, while the 5-year returns have been excellent-it has beaten the category average by a huge margin and is the second best fund.
The fund's ability to deliver in testing times makes it special. In 2000, when the markets were bearish, this fund delivered a 26 per cent return against the category average return of negative 13 per cent. This was made possible by timing the equity rally perfectly.
The fund managed the technology downfall of 2000-01 quite well by shifting into debt. Later, when the markets stabilised, it became equity friendly. On the debt side, AAA papers, cash and bank deposits and government securities have dominated its portfolio in 2004. The fund has also maintained a judicious mixture of AA+ and below papers.
Since this fund's past record shows that it lacks firepower but has the much-desired stability, conservative investors can have a look at it. However, the way things are moving now, it may well catch up with its more aggressive peers.
This article was originally published on April 08, 2005.
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