The category of diversified equity funds is studded with some big stars that attract all the attention for their size and sparkling performance. And one has to admit that barring some of the newly launched funds, most of the others well deserve the huge corpus that they boast of.
Equally true is the fact that most of the small funds have remained small over the years owing to their poor performance records. But amongst the small ones are a few funds which shine equally bright when it comes to performance, but get over-shadowed by the heavy weights because of their small sizes.
This month's Fund Scanner brings to the forefront those diversified equity funds which don't even have assets equal to 25 per cent of the category average (as per the portfolios for the month of April 2005), but their superlative performance has landed them in the top quartile on the basis of 5-yearly trailing returns (as on May 20, 2005).
We identified five such funds-Alliance Basic Industries, Bonanza Exclusive Growth, Tata Growth, GIC Fortune '94, UTI Grandmaster. Two of these funds are rated five star, while three enjoy a four star rating.
Alliance Basic Industries Fund: The five-star rated fund has outperformed the category average in all of the last four years. The fund maintains an exceptionally concentrated portfolio, investing in very few stocks. As per the April-end portfolio, the fund held only 16 stocks, with top three alone accounting for 30 per cent of the portfolio.
Bonanza Exclusive Growth: One of the brightest patches in the funds history had been the year 2001 when it lost only 0.40 per cent against the category average returns of negative 19.09 per cent. The fund's performance in the year 2004 is a cause of concern, during which the fund was ranked last in the category. However, over the years, the fund has outperformed the category and is worthy of its four star rating.
Tata Growth: After a very forgettable start in 1994, and putting up poor performance quarter after quarter, this fund staged a strong comeback in 2000. Since then, the fund has done well to overcome the poor performance that haunted it for the first few years when it was closed-ended. From being an easily avoidable fund, it has come a long way to find a place among the five star rated funds consecutively for the last ten months.
GIC Fortune '94: Quite similar to Tata Growth, this fund also delivered poor returns during the initial years. Till 2001, the fund performed badly. However, since 2002, the fund has delivered good returns, but only in patches. The fund will have to do more than that to catch the attention of the investors.
UTI Grandmaster: Time and again, this fund's returns have fluctuated wildly in comparison to the category. For example, for the quarter ended June 1996, the fund delivered 10.35 per cent returns, when the category could manage only 6.55 per cent. On the other hand, for the quarter ended March 2000, the category delivered around 6 per cent returns on an average, while the fund lost close to 12 per cent. However, in recent years, the fund has managed to avoid such volatile swings, and moved more in line with the category.
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