Technology theme swayed the fund away from diversity, padding both returns and risks in the process. While the fund has rediscovered its diversity, it needs to be sustained for steadier innings
18-May-2001 •Research Desk
Technology theme swayed the fund away from diversity, padding both returns and risks in the process. While the fund has rediscovered its diversity, it needs to be sustained for steadier innings.
With a bottom up strategy, the fund sought to invest in companies with established business model while also benchmarking the portfolio to S&P CNX Nifty - in terms of its stock and sector specific limits. With this the fund built a quality oriented diversified portfolio, with a good blend of growth and cyclical stocks. Backed by a market upturn in 1999, this well-knit strategy helped the fund post a splendid return in 1999, while smoothly out performing its benchmark.
Beginning of 2000, the fund went on a overdrive on software and telecom stocks and significantly hiked exposure to the volatile sector. Also, while the fund struck to its stock specific limits, quality picks such as Infosys and Dr Reddy's featured as top holdings along with momentum plays such as Global Tele and DSQ Software at the peak. Importantly, then fund breached its allegiance to its Index with average technology, exposure at 46% in the vaporous 2000. It ended 2000 trailing its benchmark.
The last quarter has seen diversity prevail on the fund, with the technology stance mellowing. "We have maintained near neutral weight on technology sector and we would review our current stand at an appropriate time," says Chief Investment Officer, Dileep Madgavkar. Also, the fund has brought in sharp focus on quality and better reflects its guiding index today.
Pru ICICI Growth has delivered a reasonable return at 23.34% with a diversified yet tech heavy portfolio. While the fund has recast itself in favour of diversity, it has to be sustained - for a steady innings