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Restricted by Objective?

Because of a restrictive investment objective, the fund has a tendency to get concentrated in a few sectors. In November 2005 end, the top three sectors accounted for 63.47 per cent of its portfolio

Birla MNC was launched in December 1999 with the aim of investing in stocks of multinational companies.

The fund had an inauspicious start as the equity markets turned sour soon after its launch. However, the fund did not lose as much as some of the other diversified equity funds. It managed to end the first calendar year marginally ahead of its average peer, despite losing 23.50 per cent. A restricted exposure to tech stocks did the trick. Year 2001 was even more impressive, particularly the quarter ending September 2001, when the fund lost only 3.73 per cent, much less than the category's negative returns of 14.88 per cent.

Over the years the fund has displayed this tendency of losing less than its peers in a falling market, while lagging the category when the bulls are rampant. One of the reasons is that the fund manager does not hesitate to move assets in cash and equivalents when he senses trouble. The only exception has been the quarter ended March 2004, when the fund posted negative returns of 8.42 per cent, twice the category's loss. In 2005, the fund has delivered 45.63 per cent returns, which is marginally short of the category's average 46.88 per cent.

Because of a restrictive investment objective, the fund has held less than 30 scrips in its portfolio on most occasions. However, the portfolio remains fairly diversified across these holdings. The fund prefers a buy-and-hold strategy. Many stocks have been there since long such as 3M India, ABB and Pfizer.