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Kothari Pioneer Bluechip

The virtue of diversification is easy to preach but difficult to practice. With a dedication to this golden investment rule, Kothari Pioneer Bluechip deserves being the core of any equity portfolio

The virtue of diversification is easy to preach but difficult to practice. Kothari Pioneer Bluechip, which has struck to this golden principle, reflects how far a well-diversified equity fund can take you in the long haul.

The numbers speak for themselves - an annualised return of 24.73 per cent in its over seven-year tenure has seen the fund handsomely outperformed the market. The return stands out, particularly since most of it has come in a bearish market. But it has not been a smooth sail in its life till now. The fund zoomed 120 per cent riding the IPO boom but was shaved off its gains after three years of its launch on its due redemption date as a closed-end fund. Resurrecting itself with a small asset base, the fund has followed a clearly defined strategy since 1997. In its new avatar, KP Bluechip focussed on well-established bluechip companies, which are market leaders. Besides, the fund has a fancy for wealth generating companies, which earn more than the cost of capital and sustain it with good management. In a selectively rising market, the fund has been overweight on technology, pharmaceutical and consumer sectors with the troika accounting for half of the portfolio and technology being a third of the holdings in 2000. The fund has been actively managed while spreading assets across a lot of names. The diversification, besides helping the fund scale the returns chart, has helped stem the downside risk too. Not surprisingly, the fund falls in the low risk, above return grade.

While the fund may not be a consistent topper, it offers steady returns with diversification and large-cap growth orientation. Kothari Pioneer Bluechip deserves being the core of any equity portfolio.