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Patchy Performer

Magnum IT is still far from becoming the pick of technology funds, but patches of good performance show that it has the potential to become one. Consistency is the need of the hour for the fund

Magnum IT fund has been an average performer in the category of technology funds. Though the timing to launch the fund could not have been better, it failed to capitalise on the early gains that the fund had made. Since its launch in July 1999, the fund has maintained a large-cap orientation like most of the other technology funds. It had a dream run during the quarter ended December 1999 when it delivered its best returns of 130.10 per cent.

The initial advantage was negated in the next two years 2000 and 2001 when the fund lost 46.15 and 47.59 per cent respectively during one of the worst phases of the technology sector. But the bad run for the fund continued in the year 2002 as well when the fund returned only 1 per cent against the category average of 10.34 per cent.

In the recent years, the fund has performed well in patches. For example in the second quarter of 2004, it managed to a return of 10.83 per cent as against the category average of 6.2 per cent. This was mainly due to the positive returns that the fund managed in May 2004 despite the category delivering negative returns. The fund's large cap orientation enabled it recover from the May 17 debacle quickly.

However, such periods of good performance have been marred by quarters when the fund has missed the category average by far. Because of this, returns of the fund in the last 4 years always less than the category average. In the second quarter of 2003, the fund performed poorly to provide negative returns of 5.61 per cent, when the category was up by 1 per cent.

The fund seems to be learning from its mistakes in the recent past as suggested by the one year trailing returns of nearly 40 per cent. Last three quarters of 2004 have been quite good for the fund, but it needs to maintain this comeback trail as its track record suggests that such good runs have been off set by periods of exceptionally bad performance.