For JM Basic, a sectoral fund committed to investments in the petrochemicals sector, its dedication to Reliance Industries has yielded results. However, big-ticket redemption has adversely affected the fund in recent times.
The fund has posted a return since launch of 25.22% on the back of its dedicated investment in Reliance Industries. Launched as a closed-ended fund, JM Basic was made open-ended in November 2000. The fund had mobilised a whopping Rs 420.55 crore during its IPO in 1997, thanks to large ticket investments from 600 investors. While there was no portfolio disclosure in its closed-ended avatar, the fund's performance reflects the strong correlation with Reliance Industries. For the fund yielded an annualised return of 26.76% in its closed ended avatar, while the scrip returned 23.58% over the same period.
The first portfolio disclosed in December 2000 saw the fund hold a whopping 88% of its Rs 1031 crore assets in Reliance Industries. However, the decision to convert JM Basic into an open-end fund has reduced the fund to a miniscule size, at Rs 14.34 crore. With the big-ticket redemption, the fund has rather broad based its portfolio to include Chennai Petrochemicals and Indo Rama Synthetics as its top holdings among others.
JM Basic, one of the two sectoral funds dedicated to investments in petrochemical sector, has outperformed the Sensex. However, its concentration and big ticket redemption has impacted it adversely - the fund shed 2.32% in the one year ending April 30, 2001 while UTI Petro, with a similar investment theme, has gained 32.18% over the same period.
Even while the short-term performance is in the red, the recent broad basing augurs well for the fund. However, redemption, as in the recent past, can be a deterrent to performance