With a minor change in strategy, this long-term winner is back on track. Today, the returns look much more attractive than a year ago when some of its aggressive peers had outpaced its long-term proven strategy of winning with a large-cap dominated portfolio. Till 2004, close to 70 per cent allocation to large-cap stocks resulted in a dull performance, as time was not ripe for such a strategy. However, increasing faith in mid- and small-cap stocks now has given it the much-needed zing. In the last one year, the fund has pledged more than 40 per cent of its portfolio to such companies and the result is here for everyone to see. This year till April 7, the fund generated 24.21 per cent return to race ahead of average peer's 22.72 per cent gain. In the six-month period ending March 31, the fund has produced a top quartile performance after a long gap. Of course, part of the recovery is due to the improved performance of large-cap stocks as well.
Barring this new love for mid- and small-cap stocks, everything else remain the same. Great management, low volatility, buy-and-hold strategy, a well-diversified portfolio and an ability to protect downside make this fund one of the finest options in the tax-planning category.
In March, the fund went all out after technology stocks-the exposure increased from 11.34 per cent to a massive 29.89 per cent. Infosys, which the fund had exited completely in February, has come back to become the second-most preferred pick with an allocation of 6.82 per cent. The fund has also more than doubled its exposure in TCS and HCL Technologies. Satyam Computers too has staged a strong comeback. It would be interesting to see how this extra effort to strengthen the technology department helps the fund.
Historically, the fund has generated outstanding results-an annualised return of 42.79 per cent since launch in mid-1999 is a testimony to this. It's more like a tax-planning fund, which, after receiving money for three years, invests and wait for its bets to blossom. The average holding period here is nearly 17 months which looks much better if we consider some of its racy peers who churn their portfolio every six months. Stocks like Infosys and Hindalco have been there almost. And probably the biggest advantage here is the management quality.