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Emerging Star

A fabulous 56 per cent return since its launch in October 2004, that too on the back of mid and small cap holdings, is what makes this fund a compelling option

Given the stellar performance of the large caps over the year 2006, the fund began building its position in the large caps from nil to 7.56 per cent of assets under management during the third quarter ending 31 December 2006.

True to the style of a mid and small cap oriented fund, Prudential ICICI Emerging Star holds a large number of stocks in its portfolio, the fund has been gradually rationalizing the number of holdings since May 2006 when the fund constituted 81 stocks to 58 stocks by the end of January 2007.

Technology, metals and metal products and construction were the front runners for 2006. As of 31 January, 2007 the combined exposure to the three sectors was an impressive 43.33 per cent of assets under management.

The fund has placed big bets in the technology space with holdings peaking to 29.68 per cent in June 2005. As of 31 January, 2007, 22.76 per cent of the fund's assets where deployed here.

Although the portfolio is churned quite frequently, there are some stocks that the fund manager has held on to with conviction and has been duly rewarded; the most prominent among them are Subex Azure Ltd. and Sintex Industries (both held since November 2004).

Some of the misses for the fund have been Yes Bank; which was bought in June 2005 but exited within a month's time. Sesa Goa is another one which was bought in August and sold in the subsequent month only to be picked up in February 2006 and dropped in March 2006. It was again picked up in May 2006 and offloaded in June 2006 when the markets turned bearish towards the scrip.

While the fund has outperformed the category average returns, it has not been very successful in protecting the downside. During the May crash while the category lost close to 32 per cent, the fund lost 36.6 per cent.